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12.09.2019 10 new posts under Morning Note (8), International Summary (1), Press Releases (1)

International Summary

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International Summary

"CAPIS Global Recap – 7/18/2019"

posted by Clayton Duff on 07/18/2019 at 6:49 am

by Clayton Duff

07/18/2019 at 6:49 am

Asian Headlines

It was tough sledding today in Asia with broad and in some cases, fairly sizable, losses.  The Nikkei led lower with Energy-related names especially hard-hit explorers and refiners down 4-5%.  Industrials, Materials, and IT names also experienced heavy selling.   In addition to concern over US/China trade talks (Huawei, again) rising tension with SK weighed. Those concerns saw both the Shanghai and Shenzhen down over a percent as well.   Losses in HK, SK, and Australia were better contained.

Speaking of South Korea, the BoK cut their repo rate 25bps to 1.5% which surprised the markets. Gov Lee said there was little room for more policy action with the Won trading higher today though.  In other economic news Japan’s trade surplus rose to ¥589.5B in June despite exports falling 6.7%.   A pullback of 5.4% was expected with imports down 5.2% YoY vs the .2% loss expected.  Exports to China fell 10.1%.  Indonesia too pared rates, pulling their 7 day repo rate to 5.75% from 6.00%.

Notable losers in Japan include Sony -3.6% and Canon -4% which fell the Nikkei said operating profit will slip 40% this year.  Next week the firm is expected to release their official views.  Auto-glass provider AGC fell 2% with demand out of the US and Europe weaker.

Post the close Japan’s Semi Equipment Assoc said chip-making equipment billings fell 23.1% YoY in June.

Australia’s Lend Lease rose 5% with a deal with Google to develop 3 areas in San Francisco Bay worth as much as $15B.

Post the close, Taiwan Semi reported 2Q NI at NT$66.77B, ahead of the NT$65.66B estimate.  The firm sees sales for the next quarter at $9.1-9.2B, nicely ahead of the $8.91B previous estimate. Their CFO sees gross margins in the 2H still at 50%, adding the 4Q should be better than the 3Q.

European Headlines

European indices shook off earlier weakness and are currently mixed after headlines note the ECB is looking into amending their inflation target.  The focus of the 2% target and room around it is being looked at with markets viewing the move as allowing the ECB to keep policy easy longer. As has been the case all morning Switzerland leads with gains in Novartis buoying that market.

Economic releases are light today in Europe with Swiss watch exports down 10.7% in June after rallying 11.6% prior.   On the Brexit front PM candidate Johnson sees the withdrawal agreement as unworkable.  The House of Lords and Commons are attempting to push a bill that will prevent a PM from suspending parliament in a bid to push through a deal. To note, the UK Office of Budget Responsibility said the UK will move into a recession in 2020 if a no-deal Brexit is reached.

After beginning the day down 10% SAP -6.3% has managed to shake off some of its initial losses.   The company today reported top line revs including 2Q non-IFRS cloud/software that just missed estimates.  While reaffirming FY views the firm said 2Q cloud booking growth eased to 15% from 26% in the 1Q.  An analyst with Citi noted margins too were a bit disappointing.

Novartis +4.8% upped their FY19 core operating income growth view, adding thus far they have purchased $2.8B in shares.  They added that currency moves weighed 4% on core op inc and 3% on net sales.

Asos is off 17% with distribution issues at their warehouse weighing.  These operational issues have affected the firm for some time with the stock off over 70% March of 2018.

After posting light ebit, Givaudan -4% is off despite inline revs. Margins were compressed with input costs up 5-6% as a reorg of their back office racked up costs as well.

Event Survey Actual Prior Revised
JN 34) Trade Balance Jun ¥403.5b ¥589.5b -¥967.1b -¥968.3b
JN 35) Trade Balance Adjusted Jun -¥153.2b -¥14.4b -¥609.1b -¥621.5b
JN 36) Exports YoY Jun -5.40% -6.70% -7.80%
JN 37) Imports YoY Jun -0.20% -5.20% -1.50%
SK 38) BoK 7-Day Repo Rate 18-Jul 1.75% 1.50% 1.75%
AU 39) Employment Change Jun 9.0k 0.5k 42.3k 45.3k
AU 40) Unemployment Rate Jun 5.20% 5.20% 5.20%
AU 41) Full Time Employment Change Jun 21.1k 2.4k 3.1k
AU 42) Part Time Employment Change Jun -20.6k 39.8k 42.2k
AU 43) Participation Rate Jun 65.90% 66.00% 66.00%
AU 44) NAB Business Confidence 2Q 6 -1 0
AU 45) RBA FX Transactions Market Jun A$1478m A$1384m
AU 46) RBA FX Transactions Government Jun -A$1546m -A$1526m
AU 47) RBA FX Transactions Other Jun A$3845m A$1831m
CH 48) FX Net Settlement – Clients CNY Jun -131.4b 31.8b
JN 49) Tokyo Condominium Sales YoY Jun -15.00% -10.40%
SW 50) Valueguard Swedish Home-Price Data
NE 51) Unemployment Rate Jun 3.40% 3.30%
PO 52) Current Account Balance May -1563.9m 8.6m
SZ 53) Exports Real MoM Jun -0.10% -1.20% -0.40%
SZ 54) Imports Real MoM Jun 1.40% 0.70% 0.80%
SZ 55) Swiss Watch Exports YoY Jun -10.70% 11.40% 11.60%
HK 56) Unemployment Rate SA Jun 2.80% 2.80% 2.80%
UK 57) Bank of England Bank Liabilites/Credit Conditions Surveys
UK 58) Retail Sales Ex Auto Fuel MoM Jun -0.20% 0.90% -0.30% -0.40%
UK 59) Retail Sales Ex Auto Fuel YoY Jun 2.60% 3.60% 2.20% 2.00%
UK 60) Retail Sales Inc Auto Fuel MoM Jun -0.30% 1.00% -0.50% -0.60%
UK 61) Retail Sales Inc Auto Fuel YoY Jun 2.60% 3.80% 2.30% 2.20%
HK 62) Composite Interest Rate Jun 0.95% 0.84%

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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