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International Summary

"CAPIS Global Recap – 7/8/2019"

posted by Clayton Duff on 07/08/2019 at 6:39 am

by Clayton Duff

07/08/2019 at 6:39 am

Asian Headlines

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.

European Headlines

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.

 

Event Survey Actual Prior Revised
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%
CH 9) Foreign Reserves Jun $3110.00b $3119.23b $3101.00b
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 12) Bankruptcies YoY Jun 6.37% -9.38%
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 17) Trade Balance May 17.0b 20.6b 17.9b
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

 

About the Author

Clayton Duff headshot
ClaytonDuffFVP,Senior International Trader

Clayton Duff joined the firm in 2008. He has worked in the industry since 1994 and held various trading and sales positions before CAPIS, including four years as a trader for First Southwest. He earned his bachelor’s degree from the University of Texas Arlington. Clayton maintains Series 3,...

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