Two major factors caused the markets to trade lower. Those are: the disappointing Sino-U.S. trade talks and resulting negative commentary by both parties + tensions in the Persian Gulf. Following last weeks warnings by the U.S. that Iran and/or its “proxies” are prepared to attack shipping in the region, Saudi Arabia announced two tankers in the Persian Gulf were damaged by acts of sabotage. The commodity markets are seeing both crude and gasoline higher by more than 1%. Hong Kong was closed for Buddha’s birthday.
This resulted in all the major sectors ending the day to the downside. IT, financials and materials end the day off by at least 1%.
- Softbank -3.3% following Uber’s decline during Friday’s trading debut.
- Commonwealth Bank of Australia -2.5% took additional charges for compensation to customers harmed in the “fees for no service” scandal.
- During the session, reports indicated Renault % has made a formal merger offer to Nissan +0.8%. After the close, this was downplayed. The idea of a merger continues to be discussed but Nissan remains reluctant.
- Clayton’s favorite plumbing parts supplier, Reliance Worldwide -15.6% issued a profit warning. The company lowered its Fy19 EBITDA guidance citing weakness in the Australian housing market. While maintaining its outlook for the Americas, it notes tariffs may impact FY20.
Europe is trading lower spending the entire session to the downside. The markets have shown no inclination to rally. The majority of sectors are in the red. Telecoms are off more than 2% with autos following closely behind. Retail, construction and industrials are off about 1%. Energy is better by more than 0.5% due to the higher prices noted above. Utilities are also trading better.
The bond markets are mixed. However, the yield on the German 10 yr. bund has once again turned negative.
- Thyssenkrupp -6.5% and Tata Steel -3.0% are scrapping their planned joint venture.
- In the utility sector, both E.ON +0.5% and Centrica +1.6% are bucking the day’s trend and trading higher post results.
- EssilorLuxottica’s +0.7% co-CEO’s are ending an internal debate post the merger of the two eye-wear providers. They have agreed to search for an external CEO to take charge in 2021. In the meantime, the company will attempt to provide investors with a clear strategy going forward.
On Our Side of the Pond
- Focus in D. C. will remain the continued trade chatter. While reports mentioned a possible meeting between Pres. Xi and Pres. Trump at the upcoming G-20 Summit, Pres. Trump tweeted if the trade talks linger into his “2nd term,” the consequences for China will be ever more severe.
- Adding to global tensions, Sec. of State Pompeo has canceled a schedule trip to Russia. This is due to the two nation’s stance regarding Iran.
- The S&P500 eMini’s imply a 1% decline to start.
Markets and Macro
|JN||Official Reserve Assets||Apr||—||$1293.5b||$1291.8b||—|
|AU||Home Loans MoM||Mar||-0.50%||-2.80%||0.80%||0.50%|
|AU||Owner-Occupier Loan Value MoM||Mar||-0.50%||-3.40%||3.40%||2.80%|
|SK||Bank Lending To Household Total||Apr||—||KR838.6t||KR834.1t||—|
|JN||Leading Index CI||Mar P||96.3||96.3||97.1||—|
|JN||Coincident Index||Mar P||99.6||99.6||100.4||100.5|
|FR||Bank of France Ind. Sentiment||Apr||100||99||100||—|
|GE||SURVEY REPORT: Germany Economic Forecasts in May 2019|
|FR||SURVEY REPORT: France Economic Forecasts in May 2019|
|IT||SURVEY REPORT: Italy Economic Forecasts in May 2019|
|SP||SURVEY REPORT: Spain Economic Forecasts in May 2019|
|CA||Bloomberg Nanos Confidence||10-May||—||—||54.9||—|