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

International Summary

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International Summary

"CAPIS Global Recap – 7/29/2019"

posted by Clayton Duff on 07/29/2019 at 6:52 am

by Clayton Duff

07/29/2019 at 6:52 am

Asian Headlines

Asian markets kicked off the week mostly lower with South Korea underperforming the region.  Names in the semiconductor space suffered with the tiff between them and Japan continuing.  The Nikkei though held in well, off small on the day, with Softbank +3.9% up strong.  The firm is investing big in Indonesia with further action expected.  The tech space in Japan was generally weaker today while Real Estate names led lower both in Hong Kong and on the mainland.  Speaking of Hong Kong, clashes with protesters and the government continued with China noting they support CE Lam and the suspension of the extradition bill.  However, post the white paper essentially offering the use of the mainland’s military China urged HK to quell the protests and punish those involved in violence.    To the upside, Australia ticked a bit higher on strength in IT and Communication names.  On the economic front official PMI readings are due in China tomorrow, this after Industrial Profits disappointed Friday.  Trade talks are reported to continue between the US and China Tuesday and Wednesday.  The BoJ meets Tuesday and Wednesday as well.

Automation-component maker Keyence fell 4.4% on disappointing earnings from Friday.  Amid trade tensions manufacturers are reticent to expand production despite some growth seen in the States.

Ssangyong Motors slipped 8% in SK with R&D and marketing costs pushing the firm to a 2Q loss.

Despite threats of reduced exports of rare earth materials by China, Australia’s Lynas fell 2.3% after reporting disappointing 4Q revenues.  Demand from China was noted as remaining soft.  On the lower prices the firm said it was limiting sales of neodymium and preseodymium and would instead build its inventory.  The firm is also in a quabble with Malaysia concerning a license renewal.

Post the close, China Life said they expect 1H NI to be higher by 115-135% YoY.  Upward moves in their domestic stock market buoyed investment returns leading to the uptick in NI.

European Headlines

Moves in Europe are slight with the bias to the downside.  The UK though is the outlier and is higher on the day on broad strength.  Efforts are underway to negotiate a better deal with the EU but the view is a stance on the Irish backstop will prevent that.  With that said the UK’s Trade Minister said a Free Trade Agreement with the US is now a main priority.  The Pound continues lower, plumbing levels not seen since early 2017.

Sector-wise, most are to the upside led by gains in Telcos and Financials.   Autos lag with weakness in the banking sector.  Turnover on the Stoxx 600 is currently down 2%.

Heineken -5.7% said 1H organic beer volumes were up only 3.1% vs the 3.6% expected rise leading to a 1H adj op profit that missed estimates.  Poor weather in Europe was cited for sales weakness with higher aluminum costs weighing as well.

Sanofi +2.5% upped their FY19 view on a stronger 2Q.  This despite taking a $2B charge related to its hemophilia drug Electate as competition crimped sales.  Novartis -1% is lower after missing a primary endpoint for its heart drug Paragon.

On a deal to buy Refinitive from Thomson Reuters and Blackstone, the LSE is up 15%.  The move gives the LSE further inroads into the US as it owns Tradeweb, Redi, and Eikon.

Bad news at Sports Direct -8.6% keeps a coming with a tax bill of $750M adding to the loss of their CFO and weakness at their House of Fraser unit.  The tax bill came from Belgium and is going to arbitration over it.  No dividend is expected this year but the company still plans to repurchase £30M in shares.

Event Survey Actual Prior Revised
JN 1) Retail Sales YoY Jun 0.20% 0.50% 1.20% 1.30%
JN 2) Retail Sales MoM Jun -0.30% 0.00% 0.30% 0.40%
JN 3) Dept. Store, Supermarket Sales YoY Jun -0.60% -0.50% -0.50%
IR 4) Bank of Ireland Economic Pulse Jul 82.8 90.7
FI 5) Consumer Confidence Jul -3.9 -4.6
FI 6) Business Confidence Jul -4 -5 -4
SP 7) CPI MoM Jul P -0.70% -0.60% -0.10%
SP 8) CPI YoY Jul P 0.60% 0.50% 0.40%
SP 9) CPI EU Harmonised MoM Jul P -1.20% -1.10% -0.10%
SP 10) CPI EU Harmonised YoY Jul P 0.60% 0.70% 0.60%
SP 11) Retail Sales YoY Jun 0.30% 3.10%
SP 12) Retail Sales SA YoY Jun 2.70% 2.40% 2.40% 2.60%
SZ 13) Total Sight Deposits CHF 26-Jul 581.2b 579.5b
SZ 14) Domestic Sight Deposits CHF 26-Jul 477.1b 477.5b
AS 15) Bank Austria Manufacturing PMI Jul 47 47.5
IT 16) PPI MoM Jun -0.50% 0.00%
IT 17) PPI YoY Jun 1.10% 1.80%
UK 18) Net Consumer Credit Jun 0.9b 1.0b 0.8b 0.9b
UK 19) Consumer Credit YoY Jun 5.50% 5.60% 5.70%
UK 20) Net Lending Sec. on Dwellings Jun 3.5b 3.7b 3.1b 2.9b
UK 21) Mortgage Approvals Jun 65.8k 66.4k 65.4k 65.6k
UK 22) Money Supply M4 MoM Jun 0.10% -0.10%
UK 23) M4 Money Supply YoY Jun 2.30% 2.20% 2.10%
UK 24) M4 Ex IOFCs 3M Annualised Jun 2.50% 2.80% 2.70%

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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