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08.21.2019 18 new Morning Note posts under Morning Note (10) and International Summary (8)

International Summary

News Trading Desk

International Summary

"CAPIS Global Markets 7/25/2019"

posted by Matthew Kiselica on 07/25/2019 at 7:05 am

by Matthew Kiselica

07/25/2019 at 7:05 am

Asian Markets

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.

European Markets

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

Markets Snapshot

Event Survey Actual Prior Revised
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%
SP PPI MoM Jun -0.80% 0.00%
SP PPI YoY Jun -0.60% 1.10% 1.20%
SP Unemployment Rate 2Q 13.75% 14.02% 14.70%
GE IFO Business Climate Jul 97.2 95.7 97.4 97.5
GE IFO Expectations Jul 94 92.2 94.2 94
GE IFO Current Assessment Jul 100.4 99.4 100.8 101.1
HK Exports YoY Jun -2.30% -9.00% -2.40%
HK Imports YoY Jun -3.00% -7.50% -4.30%
HK Trade Balance HKD Jun -49.1b -55.2b -34.7b
FR Total Jobseekers 2Q 3377.3k 3391.9k
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 Continuing Claims 13-Jul 1688k 1686k
US Bloomberg Consumer Comfort 21-Jul 64.7
US Kansas City Fed Manf. Activity Jul 3 0

About the Author

Matthew Kiselica headshot
MatthewKiselicaFVP,Manager of International Trading

Matthew Kiselica joined CAPIS in 2010 and has over twenty-five years of industry experience. Prior to CAPIS, he was vice president of Cazenove’s global sales trading desk in New York. Matthew is a board member for the National Psoriasis Foundation. He earned his bachelor’s degrees in fina...

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