Following yesterday’s hawkish comments from Fed Chair Powell (You may have heard something about it.), most of the markets gave ground. However, Japan was buoyed by key earnings. Most sectors end the day in the red. Materials and real estate are lower by more than 1%. Telcos end up small with consumer discretionary steady.
- MUFG +2.8%: Revenues better by 9.9% and NI +24.1%. While lending profit declined -7.5% y/y, Trading profits soared +79.0%.
- Nomura Holdings +9.0%: A very strong Q1 report with Revenues up 18.7% while NI soars an astounding 969.0%. Trading revenues rose 57.0% and investment banking activity +14.0% offsetting broker fee/commission decline of 14.0%.
- Daiwa Secs. +2.5%: Q1 revenues improve +3.5% but OP -44.0% and NI -13.3%. It will buyback up to 3.19% of capital.
- Takeda Pharmaceutical +7.8%: Q1 Oper. Income reached ¥9.87b. It indicates the Shire integration is going well. The company cut its forecast of a FY loss outlook to ¥166b from prior outlook of ¥193b. Bloomberg shows that is still below consensus but it is a wide range.
- Japan Tobacco -0.5%: Revenues dip 1.6% with OP +3.0% and NI +4.8%. The company is cutting its FY OP outlook to ¥518b from ¥540b and below consensus of ¥549.9b.
After an initial dip to start, the region is now better by 0.4% on the day. The markets have a heavy amount of earnings to delve through. Those results are driving today’s sector performance. Financials have been strong all morning better by c. 2%. Personal goods are higher more than 1% with healthcare c 1%. Basic resources follows the weakness out of Asia lower more than 3% and energy if off in excess of 1%.
The Bank of England left its benchmark rate at 0.75% with no changes its to bond purchase program.
Before proceeding to the earnings results, there is M&A news to highlight. The LSE +6.5% has agreed to purchase Refinitiv for $27b. The companies disclosed earlier in the week they were holding talks. LSE says the deal will be earnings accretive by 30.0% during the first year. The deal will be funded by a $13.5b bridge loan along with an increase to share capital.
- ArcelorMittal -1.0%: Q2 sales are $19.28b vs. $19.03be, EBITA is $1.56b vs. $1.61be. The company is lowering the bottom end of its global steel demand outlook: 0.5% to 1.5% from 1-1.5%. Interestingly, it is raising Chinese steel demand forecasts to 0.5% to 1.5% from prior 0 to 1%. Also, it sees positive debt and FCF developments.
- Axa +1.0%: Revenues are better by 4%. While earnings fell y/y due to disposals, underlying earnings of €3.62b is a +7% beat. NI €2.33b is light. However, restructuring appears to be bearing fruit.
- BATS +6.5%: H1 adj. profits rose 5.9% to £5.21b surpassing expectations. Heated tobacco and vaping revenues rose 27.0%. The company says it is on track to meet the mid-point of 30% to 50% gains for the product for the FY.
- Barclays +2.4%: Q2 PTP £3.01b, NET OI beats £5.06B vs. £4.87BE. Makes positive cost comments, now sees them below prior guidance of £13.6b to £ 13.9b.
- Rio Tinto -2.9%: H1 revenues $20.72b, under. Earnings $4.93b are both light of consensus. Dividend disappoints $1.51/sh vs. $1.76/shs. Lowers FCF estimates due to Pilbara issues. Iron ore comments worrisome.
- RD Shell -4.8%: Poor results with adj. NI $3.5b “materially below market expectations.” Most broker comments negative with poor performance across most business lines.
- Siemens -4.8%: Q3 €21.3b-inline, adj. EBITDA € 1.94b vs. €2.19be. Sees FY EBITA margin in industrial unit at lower half of 11-12% range. Also, makes worrisome outlook comments.
- Standard Chartered +3.4%: Strong H1 results with adj. PTP $2.61b vs. $2.5be. Costs fall 3%. JP Morgan sees estimates increases.
On Our Side of the Pond
- Qualcomm is falling sharply in pre-market trading. Q4 revenue guidance of $4.3b to $5.1b is below the range. The company repeatedly mentioned Huawei related issues on the call.
- Bombardier is lowering its FY sales guidance: $16.5b to $17.0b. The prior outlook was $17b.
- Cigna posts strong quarterly earnings and is raising its FY sales and earnings forecasts.
- Plenty more earnings out and still due.
- Following the Fed, Brazil reduced its benchmark Selig rate by 50 basis points to 6%. The move was expected by most projections.
Markets & Macro
|AU||AiG Perf of Mfg Index||Jul||—||51.3||49.4||—|
|AU||CBA Australia PMI Mfg||Jul F||—||51.6||51.4||—|
|SK||CPI Core YoY||Jul||0.90%||1.00%||0.90%||—|
|JN||Japan Buying Foreign Bonds||26-Jul||—||-¥162.2b||¥1027.8b||¥1029.0b|
|JN||Japan Buying Foreign Stocks||26-Jul||—||¥100.6b||-¥76.8b||—|
|JN||Foreign Buying Japan Bonds||26-Jul||—||¥607.6b||¥133.2b||¥132.9b|
|JN||Foreign Buying Japan Stocks||26-Jul||—||¥37.5b||-¥110.0b||-¥109.9b|
|AU||CoreLogic House Px MoM||Jul||—||0.10%||-0.10%||—|
|JN||Jibun Bank Japan PMI Mfg||Jul F||—||49.4||49.6||—|
|SK||Markit South Korea PMI Mfg||Jul||—||47.3||47.5||—|
|AU||Import Price Index QoQ||2Q||1.50%||0.90%||-0.50%||—|
|AU||Export Price Index QoQ||2Q||2.80%||3.80%||4.50%||—|
|CH||Caixin China PMI Mfg||Jul||49.5||49.9||49.4||—|
|IN||Markit India PMI Mfg||Jul||—||52.5||52.1||—|
|JN||Vehicle Sales YoY||Jul||—||6.70%||-0.90%||—|
|AU||Commodity Index SDR YoY||Jul||—||16.10%||13.00%||—|
|AU||Commodity Index AUD||Jul||—||131.5||127.6||—|
|SP||Markit Spain Manufacturing PMI||Jul||48||48.2||47.9||—|
|IT||Markit Italy Manufacturing PMI||Jul||48||48.5||48.4||—|
|FR||Markit France Manufacturing PMI||Jul F||50||49.7||50||—|
|GE||Markit/BME Germany Manufacturing PMI||Jul F||43.1||43.2||43.1||—|
|EC||Markit Eurozone Manufacturing PMI||Jul F||46.4||46.5||46.4||—|
|HK||Retail Sales Value YoY||Jun||-1.90%||-6.70%||-1.30%||-1.40%|
|HK||Retail Sales Volume YoY||Jun||-2.00%||-7.60%||-1.70%||-1.80%|
|UK||Markit UK PMI Manufacturing SA||Jul||47.6||48||48||—|
|UK||Bank of England Bank Rate||1-Aug||0.75%||0.75%||0.75%||—|
|UK||Bank of England Inflation Report|
|UK||BOE Corporate Bond Target||Aug||10b||10b||10b||—|
|UK||BOE Asset Purchase Target||Aug||435b||435b||435b||—|
|US||Challenger Job Cuts YoY||Jul||—||43.20%||12.80%||—|
|CA||MLI Leading Indicator MoM||Jun||—||—||0.20%||—|
|US||Initial Jobless Claims||27-Jul||214k||—||206k||—|
|CA||Markit Canada Manufacturing PMI||Jul||—||—||49.2||—|
|US||Bloomberg Consumer Comfort||28-Jul||—||—||63.7||—|
|US||Markit US Manufacturing PMI||Jul F||50.1||—||50||—|
|US||ISM Prices Paid||Jul||49||—||47.9||—|
|US||ISM New Orders||Jul||—||—||50||—|
|US||Construction Spending MoM||Jun||0.30%||—||-0.80%||—|
|IT||New Car Registrations YoY||Jul||—||—||-2.08%||—|
|UK||Lloyds Business Barometer||Jul||—||—||13||—|