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05.23.2019 15 new Morning Note posts under Morning Note (10) and International Summary (5)

International Summary

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International Summary

"CAPIS Global Markets 2/27/2019"

posted by Matthew Kiselica on 02/27/2019 at 7:39 am

by Matthew Kiselica

02/27/2019 at 7:39 am

Asian Markets

An interesting day with word Pakistan has shot down two Indian fighters.  Prior to that news the markets had been having a decent day.  Japan, Australia and S. Korea all ended the day higher.  However, they had closed when Pakistan made their announcements.  The news created risk- off sentiment and the markets that were still open closed lower or dipped from higher levels.  Pakistan fell sharply but pared most of the loss.

Sectors were mixed with minimal moves buoyed by the markets that were already closed.   IT fell more than 0.5% followed by industrials and materials.  An interesting combination of energy and healthcare improved by c. 0.2%.

Other Important News from the Region

  • Part of the gain in Japan was sparked by rebalances in both the Nikkei and TOPIX.  Takeda Pharma +2.1% is a significant increase.  Demand was forecast to be 50 m shares accounting for about 600% of its daily volume.
  • Byd -4.5% slid following its results are below consensus.  However, both Credit Suisse and Citi are out defending the name.  Specifically, Citi cites weakness as a buying opportunity.
  • Hyundai Motor +5.5% thrilled investors with a strategy update.   The company is targeting 9% ROE by FY22 and is aiming to achieve 7% oper. profit margin.  Additionally, Elliott Management is pushing for the company to increase its dividend payout.

European Markets

The region has been trading lower since the open.  However, the markets have pared their losses.  Banks are higher by close to 1% and are helping the region pare the day’s declines.  Basic resources and energy also providing some lift.  Travel/leisure, personal goods, food/bevies have been off at least 1% all morning.

The energy markets are seeing solid gains in crude.  Saudi Energy Minister Al-Falih stated U.S. inventories remain at elevated levels. Specifically, he said “brimming.”  Therefore, his nation is inclined to keep the current production cuts in place during H2 of the year.

Other Snippets from the Region

  • Following yesterday’s word the company’s were holding “talks,” Marks & Spencer -11.2% and Ocado +4.5% are forming a jv.   To pay for its 50.0% stake, Marks & Spencer is launching £600m rights issue.
  • Rio Tinto’s +0.8% FY underlying profit is a bit better than estimates.  The company is retaining its FY production guidance. In addition to a final dividend of $1.80, the firm will pay a USD$4B special dividend after assets sales grew its balance sheet.
  • Bayer +5.3% is providing some relief to investors.  Q4 revenues are improved by +29.0% and Adj. EBITDA +16.0%.  The company is seeing strong demand for herbicide and seeds as its absorbs Monsanto.  They see 11,200 plaintiffs in the US concerning Round Up cases and says there is “no new evidence to show it is unsafe.”
  • The Dutch government has secured a 13.0% stake in Air France-KLM -11.0% to match influence the French government has in the carrier.  This sets up for a power struggle and muddies strategy for the airline.
  • Merck KGAA -1.3% has agreed to purchase specialty pharma company Versum.
  • Other important earnings today include Arkema -1.9%, ITV -3.6% and Taylor Wimpey +2.6%.

On Our Side of the Pond

  • Weight Watchers is down sharply post results but both Lowes and Best Buy are trading well.
  • In the farming space, Canada’s Nutrien will purchase Australia’s Ruralco +45.0% to grow their presence in the fertilizer and crop services space.
  • Fed Chair Powell continues his testimony to Congress.
  • Pres. Trump’s former attorney Michael Cohen will provide public testimony today.

On the Markets Agenda for Tonight

  • Headlines from the summit between Pres. Trump and S.L. Jong-un.  Their meeting is occuring as we go to press.
  • Investors will keep a wary eye on the Kashmir region and any further escalation of military activity.
  • Watch for local reaction to Rio Tinto and Sun Hung Kai’s results along with the China Mobile news.
  • Earnings due include AB Inbev, BATS, Sberbank, Adecco and Galaxy Ent.
  • Macro includes Chinese manuf. and non-manuf. PMI, S. Korean ind. production and rate decision by the BoK, Japanese ind. prod., retail sales and construction related data. Europe will see a number of inflation readings.

Markets and Macro

Markets Snapshot

Event Survey Actual Prior Revised
UK UK Finance Loans for Housing Jan 38441 40634 38779 39350
SK Business Survey Manufacturing Mar 76 65
SK Business Survey Non-Manufacturing Mar 75 70
UK BRC Shop Price Index YoY Feb 0.30% 0.70% 0.40%
AU Construction Work Done 4Q 0.50% -3.10% -2.80% -3.60%
SK Department Store Sales YoY Jan 7.60% -0.70%
SK Discount Store Sales YoY Jan 6.30% -3.60%
SK Short-Term External Debt 4Q $126.6b $128.1b $127.7b
HK GDP YoY 4Q 2.20% 1.30% 2.90% 2.80%
HK GDP Annual YoY 2018 3.30% 3.00% 3.80%
HK GDP SA QoQ 4Q -0.60% -0.30% 0.10%
IN Bloomberg Feb. India Economic Survey (Table)
SP Total Mortgage Lending YoY Dec 23.10% 12.80%
SP House Mortgage Approvals YoY Dec 0.90% 14.20%
EC M3 Money Supply YoY Jan 4.00% 3.80% 4.10%
IT Consumer Confidence Index Feb 113.4 112.4 114 113.9
IT Manufacturing Confidence Feb 101.5 101.7 102.1 102
IT Economic Sentiment Feb 98.3 99.2 99.1
EC Economic Confidence Feb 106 106.1 106.2 106.3
EC Business Climate Indicator Feb 0.66 0.69 0.69
EC Industrial Confidence Feb 0.1 -0.4 0.5 0.6
EC Services Confidence Feb 10.9 12.1 11
EC Consumer Confidence Feb F -7.4 -7.4 -7.4
US MBA Mortgage Applications 22-Feb 5.30% 3.60%
CA CMHC to Release Quarterly Data on Mortgage Trends
CA CPI NSA MoM Jan 0.10% 0.10% -0.10%
CA CPI YoY Jan 1.40% 1.40% 2.00%
CA Consumer Price Index Jan 133.6 133.6 133.4
CA CPI Core- Common YoY% Jan 1.90% 1.90% 1.90%
US Advance Goods Trade Balance Dec -$73.6b -$79.5b -$70.5b
CA CPI Core- Median YoY% Jan 1.80% 1.80% 1.80%
US Retail Inventories MoM Dec 0.20% 0.90% -0.40%
CA CPI Core- Trim YoY% Jan 1.90% 1.90% 1.90%
US Wholesale Inventories MoM Dec F 0.40% 1.10% 1.10%
US Pending Home Sales MoM Jan 1.00% -2.20%
US Pending Home Sales NSA YoY Jan -4.60% -9.50%
US Factory Orders Dec 0.60% -0.60%
US Factory Orders Ex Trans Dec -1.30%
US Durable Goods Orders Dec F 1.20%
US Durables Ex Transportation Dec F 0.10%
US Cap Goods Orders Nondef Ex Air Dec F -0.70%
US Cap Goods Ship Nondef Ex Air Dec F 0.50%

About the Author

MatthewKiselicaFVP,Manager of International Trading

Matthew Kiselica joined CAPIS in 2010 and has over twenty-five years of industry experience. Prior to CAPIS, he was vice president of Cazenove’s global sales trading desk in New York. Matthew is a board member for the National Psoriasis Foundation. He earned his bachelor’s degrees in fina...

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