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International Summary

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International Summary

"CAPIS Global Markets 6 24 2019"

posted by CAPIS on 06/24/2019 at 6:40 am

by CAPIS

06/24/2019 at 6:40 am

Asian Markets

A mix across the region to start the week.  The core markets recorded small moves on either side of the flat line.  Peripherals were generally weaker.   Investors are waiting to see what will develop regarding tensions between the U.S. and Iran while the G-20 meeting occurs at the end of the week.

On the trade front, both the U.S. and China are said to be preparing for Pres. Trump and Pres. Xi to meet at the G-20.  The negotiating teams of both nations may meet tomorrow.  Also related to Pres. Trump,  N. Korea’s official news agency said Supreme Leader Kim received a personal letter from Pres. Trump.  It was said to contain “excellent content.”

Other Important Headlines

  • Concerns upon U.S. restrictions of 5G rollout for Chinese companies weighed upon the sector.
  • Down Under, RBA Gov. Powell stated global macro condition risk is to the downside.  He also cast doubts on the effectiveness of QE if all central banks are easing.
  • China Gas +5.9% fared well following results.  The company’s revenues are better y/y and its NI is ahead of consensus.  The icing on the cake is a c. 25% y/y dividend increase.
  • After the close, reports indicate Fosun Intl is considering taking a majority stake in Russian gold miner, GV Gold which is unlisted.

European Markets

Europe started to  the upside but then quickly gave ground.  There was a moderate increase to selling pressure after German IFO readings.  The Expectations number missed projections.  Overall, the markets are down small.

Most sectors are lower.  The auto sector has been the worst performer all morning (See snippets below).  It currently off slightly more than 1% but that is an improvement.  Banks and retail are off more than 0.5%.  Food and beverages have been better all morning, currently +0.3%.

In Turkey, Pres. Erdogan and his party has suffered a major setback.  In the rerun of Istanbul’s mayoral election, the opposition candidate won handily.  Interestingly, both equities and the Turkish Lira are trading stronger in response.

The commodities markets are seeing crude and gasoline rising, once again.  Pres. Trump is threatening to impose more sanctions against Iran.  While both nations are expressing the hope to avoid violence, other rhetoric has the markets on edge. Additionally, the overall impact of the Philadelphia refinery fire from last week remains to be determined.

Important Corporate Snippets

  • Daimler -4.2% has been forced to cut is outlook for a third time.  (A former colleague of mine, Mark Godridge always says profit warnings come in threes.)   The company is taking higher provisions due to diesel probes.  The automaker now sees its FY EBIT flat y/y vs. prior guidance of a small increase.  The announcement is also raising concerns about the dividend.
  • Eurofins Scientific -4.2% is also warning investors about results.  It says the impact of a previously announced cyber attack will have a “material” impact upon Q2 earnings.  Going further, it indicates the overall financial impact still needs to be determined, clouding its outlook.
  • Following Friday’s plunge, Natixis +1.3% has taken a variety of measures to reassure investors regarding risks related to its H20 investment unit.  Citigroup has stated the company took “prompt measures” that should “restore confidence.”
  • Metro +2.7% says the bid made late Friday by Daniel Kretinksy and Patrick Tkax “undervalues the company.”   The bid of €16 per share is c. 3% premium to Friday’s close.

On Our Side of the Pond

  • Eldorado Resorts is purchasing Caesers Entertainment.  The cash and stock bid price of c. $13 per share is a c. 30% premium to Friday’s close.
  • Bristol-Myers Squibb intends to sell its psoriasis treatment Otezla.  This is a move to make its acquisition of Celgene more palatable to the FTC.
  • Citing the opinion of advisors, Circor’s board has unanimously reject the bid made by Crane.
  • Pres. Trump stated he has not looked to demote or remove Fed Chair Powell.  However, he says he has the right to do so.

Markets and Macro

Markets

Event Survey Actual Prior Revised
JN Supermarket Sales YoY May -0.70% -1.00%
JN Leading Index CI Apr F 95.9 95.5
JN Coincident Index Apr F 102.1 101.9
GE IFO Business Climate Jun 97.4 97.4 97.9
GE IFO Expectations Jun 94.6 94.2 95.3 95.2
GE IFO Current Assessment Jun 100.3 100.8 100.6 100.7
US Chicago Fed Nat Activity Index May -0.05 -0.45
CA Bloomberg Nanos Confidence 21-Jun 56.9
US Dallas Fed Manf. Activity Jun -2 -5.3

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