Another solid day for the region with each of the core markets building upon yesterday’s gains. The Mainland Chinese markets were the stars. China is permitting local governments to use proceeds from special bond sales to fund “qualified major projects.” This should boost infrastructure spending. Australia needed to play catch up following yesterday’s holiday.
All the major sectors close to the upside with Chinese names providing impetus. Materials improved by 2% followed by consumer staples, IT and industrials.
Other Important Headlines
- Another news item that caught Chinese investors eye is a report indicating the White House acting budget head is asking for a delay to the Huawei Tech business ban.
- The markets paid little attention to Pres. Trump saying he will impose additional tariffs on Chinese goods if Pres. Xi doesn’t meet with him at the G-20 meeting.
- Alibaba is said to have selected CICC and Credit Suisse as brokers for its Hong Kong listing. The company is expected to officially file in the next “few weeks.”
- Down Under, AGL Energy -7.2% is proposing to purchase Vocus Group +8.8% at A$4.85 per share. That is a 27.0% premium to Friday’s close (market was closed yesterday). The prior bid by EQT which ended without a deal was A$5.25 per share.
- After the local close, China’s Passenger Car Assoc. stated auto sales declined for the 12th consecutive month. The fall during May is 12.5%.
Europe is trading very well and currently the markets are near highs. Remember, a number of markets need to play catch up following yesterday’s holiday including Germany and Switzerland. The majority of sectors are higher by at least 1%. Basic resources surge more than 2.5% with autos trading shy of +2.o%. Utilities, travel/leisure and food/bevies have been down small most of the session.
The commodities markets are seeing iron ore surging due to the Chinese news noted in our Asian Markets section. Gasoline futures are also seeing strong gains. A fire occurred yesterday evening at the Philadelphia Energy Solutions refinery. It is largest such facility on the East Coast.
In the U.K., while not as crowded as the U.S. Democrat Presidential field, 10 Conservatives have thrown their hat in the ring to lead the party. This link has the full list along with related videos. The first round of voting will be Thursday.
- Handelsblatt says ING +0.9% has stepped away from any tie up with Commerzbank +1.2%.
- Ted Baker -28.6% is having a brutal day. The company has issued its third profit warning noting “extremely difficult trading conditions” which are negatively affecting sales and margins. Brokers are cutting estimates.
- In addition to playing catch-up, Novo Nordisk +5.9% is benefiting from comments by Barclays. The broker says study data regarding the cariovascular benefits of Eli Lilly’s Trulicity are “underwhelming.” The results were presented at the American Diabetes Assoc. conference and Lilly’s shares were down 3.7% yesterday.
On Our Side of the Pond
- The NY Post claims a Federal judge will rule against the CVS/Aetna merger.
- Apollo Global has agreed to purchase Shutterfly for $1.74b. The cash bid of $51 per share is a 31.0% premium to yesterday’s close.
Markets & Macro
|JN||Money Stock M2 YoY||May||2.50%||2.70%||2.60%||2.50%|
|JN||Money Stock M3 YoY||May||2.20%||2.30%||2.20%||—|
|AU||NAB Business Conditions||May||—||1||3||—|
|AU||NAB Business Confidence||May||—||7||0||—|
|JN||Machine Tool Orders YoY||May P||—||-27.30%||-33.40%||—|
|FR||Bank of France Ind. Sentiment||May||100||99||99||—|
|UK||Claimant Count Rate||May||—||3.10%||3.00%||—|
|UK||Jobless Claims Change||May||—||23.2k||24.7k||19.1k|
|UK||Average Weekly Earnings 3M/YoY||Apr||3.00%||3.10%||3.20%||3.30%|
|UK||Weekly Earnings ex Bonus 3M/YoY||Apr||3.20%||3.40%||3.30%||—|
|UK||ILO Unemployment Rate 3Mths||Apr||3.80%||3.80%||3.80%||—|
|UK||Employment Change 3M/3M||Apr||4k||32k||99k||—|
|EC||Sentix Investor Confidence||Jun||2.5||-3.3||5.3||—|
|US||NFIB Small Business Optimism||May||102||105||103.5||—|
|US||PPI Final Demand MoM||May||0.10%||—||0.20%||—|
|US||PPI Ex Food and Energy MoM||May||0.20%||—||0.10%||—|
|US||PPI Ex Food, Energy, Trade MoM||May||0.20%||—||0.40%||—|
|US||PPI Final Demand YoY||May||2.00%||—||2.20%||—|
|US||PPI Ex Food and Energy YoY||May||2.30%||—||2.40%||—|
|US||PPI Ex Food, Energy, Trade YoY||May||—||—||2.20%||—|