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.
- 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.
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.
- 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
|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 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%||—|