The majority of Asia moved to the upside following the U.S. gains. S. Korea did not take part in the gains for the 2nd consecutive day. Investors are still worried about potential trades issue with Japan along with some disappointing local earnings. Sentiment was not helped by N. Korea’s launch of two missiles. However, the rest of the region managed to shrug it off.
In terms of sectors and following yesterday’s surge in the SOX, IT led with a gain of 1%. Telcos, consumer staples, financials and healthcare were also to the upside, better by c. 0.5%. The only two major sectors that gave ground are energy and materials.
The “Aussie” fell after RBA Gov. Lowe indicated the RBA is ready to provide stimulus dye to the local and global macro picture.
Important Corporate Headlines
- SK Hynix -2.0% is one of the names that held the KOSPI back. The company’s Q2 operating profit of KRW 637.63b is more than KRW 100b below consensus.
- Nissan -2.0% following confirmation of yesterday’s Nikkei report the company’s OP would be lower by c. 90.0%. After the close, Nissan posted an OP decline of 99%. It is doubling planned job cuts to 12,500 while cutting production.
- Canon’s -2.8% now sees it FY operating profit forecast to ¥215b from prior guidance of ¥274b. The new outlook is also below the range. The company cites global macro and trade tension concerns.
- Advantest +20.2% seeing strong testing equipment demand that helped it post strong Q1 results.
- Samsung Elec. will attempt to relaunch the Galaxy Fold in “select markets” during September.
The markets had been up small most of the morning. They are currently at highs following the ECB rate decision and comments. The central bank made no changes to current rates. It pledges to keep rates at current levels or lower for as long as need. It will also consider new asset purchase programs. The € has dipped into the red since the headlines and European sovereign yields have moved lower.
Sectors were mixed prior to the headlines but now most are green. Banks, food/bevies and healthcare are higher by at least 1%. Autos and chemicals are off c. 0.5% but have pared roughly half of their losses.
Slew of Company Earnings
AB INBEV +5.5%: Strong earnings growth of 9.4% with organic revenue growth of 5.1%. Volumes rose the most in 5 years also exceeding expectations.
BASF -1.0%: Q2 Sales €5.16b, inline, adj. EBIT €1.05b vs. €966.3me. NI € 6.46b helped by Wintershall spinoff. Outlook comments are causing the shares to trade down: “low visibility”, “poor predictability.”
DANONE +1.7%: H1 Sales €12.65b, recur. OI € 1.86b, oper. Margin 14.7%-inline. Q2 LFL +2.5% a touch better. Confirms FY forecast of 3% LFL growth, recurring. oper. margin exceeding 15.0%.
DIAGEO -1.5%: Fall on disappointing organic sales growth FY +6% vs. 6.2%e. FY net sales GBP 12.87b, adg. OP GBP 4.12b Plans GBP 4.5b in capital returns.
LVMH +1.5%: Strong organic growth of 12.0% vs. 10.2%e in Q2. Fashion/leather unit +20.0% vs. 14.4%e.
ROCHE +2.0%: Sold results as H1 CORE EPS CHF 11.2 vs. 10.65e. Raises sales growth to mid-high single digits.
TOTAL -0.25%: Mixed set of results Earnings decline to $2.89b a touch light of consensus. However, Cash flow improved: 5% while oil and natural gas production rose: 9% . Plans $5b in asset disposals of mostly E&P assets for FY 19/20.
UNILEVER -0.4%: Disappointing sales results: Q2 underling sales +3.5% vs. 3.7%e, under. Volume +1.2% vs. +1.9%e. Still sees underlying sales growth in lower half of 3-5% range.
Plenty more on the tape so mind your eye.
On Our Side of the Pond
- The U.S. also has a cornucopia of results today. Post results, Facebook is trading better. However, Tesla, Ford, Bristol Myers-Squibb and Southwest are trading lower. Plenty more due.
- Keep and eye on Spring and T-Mobile with reports continuing to allege to U.S. approval of the deal could come today.
Markets & Macro
|SK||GDP SA QoQ||2Q P||0.90%||1.10%||-0.40%||—|
|SK||GDP YoY||2Q P||1.90%||2.10%||1.70%||—|
|JN||PPI Services YoY||Jun||0.80%||0.70%||0.80%||0.90%|
|JN||Japan Buying Foreign Bonds||19-Jul||—||¥1027.8b||¥950.0b||¥949.6b|
|JN||Japan Buying Foreign Stocks||19-Jul||—||-¥76.8b||-¥18.6b||—|
|JN||Foreign Buying Japan Bonds||19-Jul||—||¥133.2b||¥844.3b||—|
|JN||Foreign Buying Japan Stocks||19-Jul||—||-¥110.0b||-¥93.1b||—|
|AU||Bloomberg July Australia Economic Survey (Table)|
|CH||Swift Global Payments CNY||Jun||—||1.99%||1.95%||—|
|GE||IFO Business Climate||Jul||97.2||95.7||97.4||97.5|
|GE||IFO Current Assessment||Jul||100.4||99.4||100.8||101.1|
|HK||Trade Balance HKD||Jun||-49.1b||-55.2b||-34.7b||—|
|UK||CBI Retailing Reported Sales||Jul||-15||-16||-42||—|
|UK||CBI Total Dist. Reported Sales||Jul||—||-11||-22||—|
|CA||CFIB Business Barometer||Jul||—||57.8||61.5||—|
|EC||ECB Main Refinancing Rate||25-Jul||0.00%||0.00%||0.00%||—|
|EC||ECB Marginal Lending Facility||25-Jul||0.25%||0.25%||0.25%||—|
|EC||ECB Deposit Facility Rate||25-Jul||-0.40%||-0.40%||-0.40%||—|
|US||Durable Goods Orders||Jun P||0.70%||—||-1.30%||—|
|US||Durables Ex Transportation||Jun P||0.20%||—||0.40%||—|
|US||Cap Goods Orders Nondef Ex Air||Jun P||0.20%||—||0.50%||—|
|US||Cap Goods Ship Nondef Ex Air||Jun P||-0.20%||—||0.60%||—|
|US||Advance Goods Trade Balance||Jun||-$72.5b||—||-$74.5b||—|
|US||Wholesale Inventories MoM||Jun P||0.50%||—||0.40%||—|
|US||Retail Inventories MoM||Jun||0.20%||—||0.50%||—|
|US||Initial Jobless Claims||20-Jul||218k||—||216k||—|
|US||Bloomberg Consumer Comfort||21-Jul||—||—||64.7||—|
|US||Kansas City Fed Manf. Activity||Jul||3||—||0||—|