09.23.2022 11 new Morning Note posts under Morning Note (10) and CAPIS Insights (1)

International Summary

News Trading Desk

International Summary

"CAPIS Global Markets 3/19/2019"

posted by CAPIS on 03/19/2019 at 6:27 am


03/19/2019 at 6:27 am

Asian Markets

A rather dull session today.  The majority of markets recorded scant moves on either side of the flat mark.  Investors appear to be taking a cautious stance as the FOMC meeting commences with the decision due tomorrow.

Correspondingly, sector moves were modest.  Consumer staples fell more than 0.5% largely due Chinese names seeing profit taking following yesterday’s surge.  Real estate, telcos and energy improved by less than 0.5%.

Down Under, the RBA minutes revealed the bank sees “no need for near term changes to rates.”  The bank is keeping a keen eye on a balance between a tight labour (not a typo) market and “considerable uncertainty” pertaining to consumption.

Important Headlines

  • Ahead of results due tomorrow, Tencent +0.3% is reportedly targeting a 10.0% reduction to management.
  • Rio Tinto +1.7% despite a U.S. court ruling the mining giant must face an SEC lawsuit regarding the valuation of coal assets in Mozambique.  The gains were driven by yesterday’s strength in the space and strong iron ore prices.
  • Bernstein sees Macau gross gaming revenues as “muted” for Q1.  The broker is cutting its March estimates.  It now projects a decline of 3% to 5% y/y from its previous estimate of -1% to +1%.
  • CSPC Pharma’s +3.3% FY NI are inline with consensus.  Several brokers are upgrading the shares post the results.
  • Goldman  Sachs is making an overweight call on Indian equities citing the potential for a pre-election rally.
  • The HKMA has once again taken action to protect its currency band.  It has purchased another HK$2.01b with the currency once again trading at the weekend end of the range.
  • After the close, China Unicom posted February usage data. Total subscribers are 319.76m which is a 1.9% m/m increase.

European Markets

Europe was off to a flattish start but has been steadily moving higher.  The UK’s employment change is much better than expected while Brexit chatter and a broker call push the markets higher.

All the major sectors are currently to the upside.  The auto sector is the star better by c. 2.5%.  See our snippets below.  Basic resources, retail and industrials are ahead by at least 1%.

The soap opera that Brexit has become continues to unfold.  House of Common Speaker Bercow is blocking a 3rd Brexit deal vote unless “significant” changes are made.  The EU is said to be considering a delay until at least July 1st.

The commodities markets are seeing palladium setting an all time high.  The metal is seeing strong demand from auto makers who must meet stricter emission guidelines.  It is used in catalytic converters to reduce emissions.  Also, there is speculation some Russian supply will be taken offline due to sanctions.

Important Snippets

  • The auto sector has a number of factors driving the it higher.  For starters, the French press allege the Peugeot +2.3% family is now in support of M&A.  Fiat Chrysler +5.1% higher in reaction.  Porsche +3.7% has increased its holding in VW +1.7% while providing its FY outlook and FY18 dividend.  Bank of America is make a contrarian buy call for the sector.
  • Ocado’s +3.2% results reassure the market.  Q1 sales rose 11.2% despite the fire at its Andover facility impacting sales by 1.2%.  Goldman sees this as a sign the fire is a temporary setback and has upgraded the shares to outperform.
  • Luxury goods are generally trading better.  Swiss Watch Exports are better by 3.4% y/y.  This is an improvement from the prior months +0.4% y/y.  Swatch +4.3%, Richemont +2.5%.
  • Aluminium (not a typo producer), Norsk Hydro -1.0% has suffered a major cyberattack affecting operations in both the Europe and U.S.  The company is unable to provide the impact upon forecasts at this time.

On Our Side of the Pond

  • Revlon is trading down sharply pre-market.  The company is suffering from a double whammy.  Its quarterly results are below expectations.  Even more worrisome, it says the delayed 10-K filing “may” reveal a “material weakness” in its financial reporting oversight and control!
  • FedEx and Tencent Music report after the close.
  • The U.S. will publish factory orders and durable goods.

Markets and Macro

Markets Snapshot

Event Survey Actual Prior Revised
AU ANZ Roy Morgan Weekly Consumer Confidence Index 17-Mar 111.9 109.5
AU House Price Index QoQ 4Q -2.00% -2.40% -1.50%
AU House Price Index YoY 4Q -5.00% -5.10% -1.90%
AU RBA Minutes of March Policy Meeting
EC SURVEY REPORT: Euro Area Economic Forecasts in Mar. 2019
SP Labour Costs YoY 4Q 0.90% 1.90%
HK Unemployment Rate SA Feb 2.80% 2.80% 2.80%
HK Composite Interest Rate Feb 0.80% 0.83%
UK SURVEY REPORT: Economists Lower U.K. Growth Outlook for 2019
IT Trade Balance Total Jan 322m 3658m 2755m
IT Trade Balance EU Jan 907m -613m -1516m
UK Claimant Count Rate Feb 2.90% 2.80%
UK Jobless Claims Change Feb 27.0k 14.2k 15.7k
UK Average Weekly Earnings 3M/YoY Jan 3.20% 3.40% 3.40% 3.50%
UK Weekly Earnings ex Bonus 3M/YoY Jan 3.40% 3.40% 3.40%
UK ILO Unemployment Rate 3Mths Jan 4.00% 3.90% 4.00%
UK Employment Change 3M/3M Jan 120k 222k 167k
EC Construction Output MoM Jan -1.40% -0.40% 1.10%
EC Construction Output YoY Jan -0.70% 0.70% 2.10%
EC Labour Costs YoY 4Q 2.30% 2.50%
GE ZEW Survey Current Situation Mar 13 11.1 15
GE ZEW Survey Expectations Mar -11 -3.6 -13.4
EC ZEW Survey Expectations Mar -2.5 -16.6
US Factory Orders Jan 0.30% 0.10%
US Factory Orders Ex Trans Jan -0.60%
US Durable Goods Orders Jan F 0.40% 0.40%
US Durables Ex Transportation Jan F -0.10% -0.10%
US Cap Goods Orders Nondef Ex Air Jan F 0.80% 0.80%
US Cap Goods Ship Nondef Ex Air Jan F 0.80%


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