After mixed performance yesterday, most of the core markets managed modest gains. However, activity was muted with volumes dramatically lower due to yesterday’s U.S. holiday and the payroll data due this morning. India is a standout to the downside. Investors are disappointed by two key factors in the government’s fiscal plan. There was less stimulus spending than anticipated and taxes will be increased for a higher bracket.
Sectors were mixed. Consumer staples fared well rising more than 1%. Healthcare advanced more than 0.5%. Energy ended the day lower by c. 0.5% followed by materials.
Other Important Headlines
- Samsung Elec. -0.75% is the key corporate story. The company’s preliminary Q2 OP of KRW 6.5t is ahead of consensus: KRW 6.08t. However, that includes a one-off customer related gain of KRW 900b. It is speculated to have come from Apple. Taking that out of the OP puts it below estimates.
- Iron ore futures in Shanghai tumbled when a Chinese mill association asked authorities to investigate the recent price surge.
- Reports allege China is asking trusts to limit financing within the property sector. The Shanghai Property Index fell more than 1% but pared a loss of 1.9%.
- After the close, China announced its new tech board will commence trading on the 22nd.
Europe has been lower since the open following German factory orders for May which are well below expectations, declining more than thought. The markets are currently near their lows.
Most sectors are lower. Industrials and basic resources have been off at least 1.5% more of the morning. Construction is down c. 1%. Defensives and retail are proving sum support.
The debt markets are fairly quiet and most yields are seeing small gains. However, yesterday the yield on the German 10 yr. bund fell below the ECB’s deposit rate!
- Osram Licht’s +1.8% board is recommending the bid made by Bain Capital and the Carlyle Group. It values Osram at €3.4b. It works out to €35 per share vs. the stock trading below €29 on Tuesday prior to M&A speculation hitting the tape.
- Reports allege IAG -1.0% is mulling a bid for Norwegian Air +7.1%. However, IAG has denied the story.
- About three hours into the trading day, BWM -0.5% CEO Kreuger disclosed he will not seek reappointment to the post. His current term expires at the end of April 2020. He wishes to ‘pursue new professional endeavors.’
- U.K. building supplier Sig Plc -4.0% notes U.K. construction activity is seeing “marked deterioration” as the year progresses. This follows the Market UK Construction PMI from earlier in the week which was well below expectations: 43.1 vs. 49.2 expected.
- Logistic company John Menzies -11.0% is also making dire prognostications. The company notes weak cargo volumes and reduced flight schedules. Analysts foresee estimate cuts of 6%-10%.
On Our Side of the Pond
- Fairly quiet post the U.S. holiday.
- On the non-serious side of things, MAD Magazine will cease publishing new issues ending 67 years of zany humor for kids.
- We can now await the Payroll data.
Have a good weekend!
Markets & Macro
|IN||India’s Economic Survey|
|GE||Markit Germany Construction PMI||Jun||—||50||51.4||—|
|UK||New Car Registrations YoY||Jun||—||-4.90%||-4.60%||—|
|EC||Retail Sales MoM||May||0.30%||-0.30%||-0.40%||-0.10%|
|EC||Retail Sales YoY||May||1.60%||1.30%||1.50%||1.80%|
|AU||AiG Perf of Construction Index||Jun||—||43||40.4||—|
|JN||Household Spending YoY||May||1.50%||4.00%||1.30%||—|
|JN||Official Reserve Assets||Jun||—||$1322.3b||$1308.0b||—|
|JN||Leading Index CI||May P||95.4||95.2||95.9||—|
|JN||Coincident Index||May P||103.1||103.2||102.1||—|
|IN||India FY20 Budget Presentation|
|GE||Factory Orders MoM||May||-0.20%||-2.20%||0.30%||0.40%|
|GE||Factory Orders WDA YoY||May||-6.20%||-8.60%||-5.30%||—|
|FR||Current Account Balance||May||—||0.3b||-0.8b||-1.2b|
|SP||Industrial Output NSA YoY||May||—||1.80%||-2.00%||—|
|SP||Industrial Output SA YoY||May||0.60%||1.40%||1.70%||1.80%|
|SP||Industrial Production MoM||May||-0.50%||0.30%||1.80%||—|
|UK||Halifax House Prices MoM||Jun||-0.40%||-0.30%||0.50%||0.40%|
|UK||Halifax House Price 3Mths/Year||Jun||5.70%||5.70%||5.20%||—|
|UK||Unit Labor Costs YoY||1Q||—||2.10%||3.10%||—|
|IT||Istat Releases the Monthly Economic Note|
|CA||Net Change in Employment||Jun||9.9k||—||27.7k||—|
|US||Change in Nonfarm Payrolls||Jun||160k||—||75k||—|
|US||Two-Month Payroll Net Revision||Jun||—||—||—||—|
|US||Change in Private Payrolls||Jun||150k||—||90k||—|
|CA||Hourly Wage Rate Permanent Employees YoY||Jun||2.70%||—||2.60%||—|
|US||Change in Manufact. Payrolls||Jun||3k||—||3k||—|
|CA||Full Time Employment Change||Jun||—||—||27.7||—|
|CA||Part Time Employment Change||Jun||—||—||0||—|
|US||Average Hourly Earnings MoM||Jun||0.30%||—||0.20%||—|
|US||Average Hourly Earnings YoY||Jun||3.20%||—||3.10%||—|
|US||Average Weekly Hours All Employees||Jun||34.4||—||34.4||—|
|US||Labor Force Participation Rate||Jun||62.80%||—||62.80%||—|
|CA||Ivey Purchasing Managers Index SA||Jun||—||—||55.9||—|