Asian indices started the week to the downside after Friday’s job numbers in the States eased hopes for a rate cut by the Fed. Even as talks continue between the US and China, Chinese markets led lower on broad weakness. IT names were weaker on the Shanghai by nearly 4% as a whole with software-specific stocks falling 3-7%. Hong Kong too fell but defensive names like Health Care and Consumer Staples fell the most. In Japan the Nikkei fell with Health Care off over 2%. Industrials closed lower with Core Machine Orders missing big on a MoM basis. The Kospi was not immune from the selling with giant Samsung down nearly 3% with the semi-spat with Japan growing. India and Australia eased lower as well.
Japan is limiting much-needed components required to produce memory chips to Korea. Over the weekend Samsung’s vice-chairman went to Japan to try to work out a compromise but investors are not so hopeful. Peer Hynix fell 1.5% with many calling the restriction retaliation for a Korean court ruling Japanese companies owe Koreans for forced labor under colonial rule. Korea has said it will support firms affected by the export curbs.
Post the 8 month-low Machine Order reading BoJ head Kuroda said in Tokyo that rates will remain ultra low until at least next Spring. After a strong start to the day Sony closed flattish despite a strong showing by its Spider Man movie. Softbank weighed as it dropped 1.7% with its subsidiary ARM Holdings reported sales held flat over the last year.
Famed short-seller Muddy Waters called Anta Sports -halted- a short, claiming concern over its financial reporting and relationships with distributors. The stock was off ~9% before being halted.
Europe has made little progress in direction today with a fairly even balance of sectors and individual names up vs down with turnover down 25%. Miners and steel names are a bit higher with Copper today up 70bps. Oil is flat as-is the Euro and Pound against the Dollar.
On the economic front Germany’s trade surplus grew by $3B in May, fueled by stronger exports. Headlines are light elsewhere in the region as well in the States. The Turkish Lira is weaker after President Erdogan fired his central bank head, sparking fresh concerns of political meddling. Concerns over aggressive rate cuts are worrying markets leading to continued selling in their currency.
On the equity front Deutsche Bank -1.9% is in focus after it said they will pare most of its Asia-Pacific equity business. With that said, 18k employees will receive pink slips with a slew of executives expected to out the door as well. Additionally, up to €80B of assets are expected to be placed into a “bad bank” with those assets accounting for approximately 25% of the bank’s balance sheet. A 2Q charge of €3B is expected with no dividend now expected this year or next. The cuts have already begun with half of its equity staff let go in Asia with another 25% expected to leave within a month. Traders, analysts, and investment bankers are included in the cuts.
While FY organic revs for the year will be near the top end of guidance Sodexo -4% today said 4Q numbers will be “less dynamic”. The firm has experienced 2-3 notable contract losses this year including some in their health care unit.
Share in Pirelli +3.7% are accelerating to the upside after JP Morgan upped the name to Overweight noting they see the potential for its stock price to rise 50%.
Expanding on prior headlines ThyssenKrupp +4.2% is said to be planning talks in the Fall concerning selling its elevator unit. Along with Kone, CVC and KKR are said to be interested with an IPO still possible. Sovereign wealth funds and pension funds are also said to be interested.
|IR||1)||Consumer Confidence Index||Jun||—||90.9||89.9||—|
|JN||2)||BoP Current Account Balance||May P||¥1395.3b||¥1594.8b||¥1707.4b||—|
|JN||3)||BoP Current Account Adjusted||May P||¥1231.0b||¥1305.7b||¥1600.1b||—|
|JN||4)||Trade Balance BoP Basis||May P||-¥758.9b||-¥650.9b||-¥98.2b||—|
|JN||5)||Core Machine Orders MoM||May||-3.80%||-7.80%||5.20%||—|
|JN||6)||Core Machine Orders YoY||May||-3.60%||-3.70%||2.50%||—|
|JN||7)||Bank Lending Incl Trusts YoY||Jun||—||2.30%||2.60%||—|
|JN||8)||Bank Lending Ex-Trusts YoY||Jun||—||2.40%||2.80%||—|
|IR||10)||Ulster Bank Ireland Construction PMI||Jun||—||53.1||54.9||—|
|AU||11)||ANZ Job Advertisements MoM||Jun||—||4.60%||-8.40%||-8.20%|
|JN||13)||Eco Watchers Survey Current SA||Jun||43.8||44||44.1||—|
|JN||14)||Eco Watchers Survey Outlook SA||Jun||44.5||45.8||45.6||—|
|GE||15)||Industrial Production SA MoM||May||0.40%||0.30%||-1.90%||-2.00%|
|GE||16)||Industrial Production WDA YoY||May||-3.20%||-3.70%||-1.80%||-2.30%|
|GE||18)||Current Account Balance||May||12.6b||16.5b||22.6b||22.9b|
|GE||19)||Exports SA MoM||May||0.90%||1.10%||-3.70%||-3.40%|
|GE||20)||Imports SA MoM||May||0.30%||-0.50%||-1.30%||-0.90%|
|FI||21)||Trade Balance||May P||—||-10m||-322m||-300m|
|FR||22)||Bank of France Ind. Sentiment||Jun||99||95||99||—|
|EC||23)||Bloomberg July Eurozone Economic Survey (Table)|
|SW||24)||SEB Sweden Housing-Price Indicator|
|GE||25)||Bloomberg July Germany Economic Survey (Table)|
|FR||26)||SURVEY REPORT: France Economic Forecasts in July 2019|
|IT||27)||Bloomberg July Italy Economic Survey (Table)|
|SP||28)||SURVEY REPORT: Spain Economic Forecasts in July 2019|
|SZ||29)||Total Sight Deposits CHF||5-Jul||—||579.0b||579.3b||—|
|SZ||30)||Domestic Sight Deposits CHF||5-Jul||—||476.1b||466.7b||—|
|EC||31)||Sentix Investor Confidence||Jul||0.1||-5.8||-3.3||—|
|IR||32)||New Vehicle Licences||Jun||—||6078||12863||—|