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

International Summary

News Trading Desk

International Summary

"CAPIS Global Markets 8/1/2019"

posted by Matthew Kiselica on 08/01/2019 at 6:45 am

by Matthew Kiselica

08/01/2019 at 6:45 am

Asian Markets

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.

Important Headlines

  • 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.

European Markets

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.

Earnings Snippets:

  • 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

Markets Snapshot

Event Survey Actual Prior Revised
AU AiG Perf of Mfg Index Jul 51.3 49.4
AU CBA Australia PMI Mfg Jul F 51.6 51.4
SK CPI MoM Jul 0.00% -0.30% -0.20%
SK CPI YoY Jul 0.80% 0.60% 0.70%
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%
SK Exports YoY Jul -11.50% -11.00% -13.50% -13.70%
SK Imports YoY Jul -8.10% -2.70% -11.10% -10.90%
SK Trade Balance Jul $4600m $2441m $4168m $3995m
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
US Continuing Claims 20-Jul 1674k 1676k
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 Manufacturing Jul 52 51.7
US ISM Employment Jul 54.5
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

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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