09.23.2022 11 new Morning Note posts under Morning Note (10) and CAPIS Insights (1)

International Summary

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International Summary

"Risk-Off Markets 8/5/2019"

posted by CAPIS on 08/05/2019 at 6:57 am


08/05/2019 at 6:57 am

Risk Off Markets

Following latest week’s word Pres. Trump would impose further sanctions upon Chinese products, China provided further reason for investors to be more defensive.  The PBoC set the Yuan reference price weaker than CNY6.90 to the Greenback.   The currency tumbled breaching CNT7/$ for the first time since 2008.  However, that wasn’t the only news that rattled investors.  Reports allege China is telling state owned companies to halt purchases of U.S. agricultural products.

Equity markets are tumbling with all the major indices lower in Asia and Europe.  A bounce off the European lows could not maintain momentum.  In both regions, all the major sectors are red.   Asia saw most off in excess of 1%. Losses in telcos, real estate and healthcare exceeded 2%.  Europe is seeing basic resources lower more than 3%.  There are eclines of at least 2% among tech, construction, personal goods, autos, industrials, retail and financials.

The debt markets are seeing sovereign bond yields tumble.  Most EU core yields are lower 2 to 4 basis points.  The U.S. 1o yr. yield is lower by 8 basis points.  In the commodity and currency markets, most risk assets fall while safe havens rally.  Bitcoin is better by more than 10.0%.

Corporate Snippets

  • Toyota Motors -0.6% is a relative outperformer following the results published Friday.  The company trimmed its FY OP outlook but its Q1 OI was well ahead of consensus.
  • Subaru +3.9% surged thanks to a Q1 OP beat of c. 50.0%!
  • Asics +23.9% also bucks the overall trend.  The company provided the trifecta of: increasing its FY NI forecast by 50.0%, boosting its dividend forecasts and announcing a buyback.
  • Kobe Steel -15.1% is a different story.  The company sees it FY current profit 67.0% lower than its prior guidance.
  • HSBC’s -1.8% headline results read fairly well.  However, CEO Flint is stepping down after only 18 months at the helm.  The company’s buyback is less than anticipated.   It will reduced its workforce by 4,000 employees.
  • Linde +1.5% now sees its FY adj. EPS growth 12-16% vs. its prior outlook of 9-13%.
  • The WSJ indicates Renault +0.2% and Nissan -4.3% are conducting talks to reshape their alliance.  Renault’s goal is to reduce its Nissan holding and revive Fiat Chrysler -0.5% talks.
  • Aslo, on the M&A front. % has agreed to gobble up Just Eat % in an all share deal.

On Our Side of the Pond

  • At present, Pres. Trump has not tweeted regarding the Chinese developments from overnight.
  • Berkshire Hathaway’s Q1 profits are better by 17.0%.  The company’s cash holding is now $122b as Mr. Buffett finds little value at current equity levels.
  • Canada is closed for Civic Day.

Markets & Macro

Markets Snapshot

Event Survey Actual Prior Revised
SK Foreign Reserves Jul $403.11b $403.07b
AU AiG Perf of Services Index Jul 43.9 52.2
AU CBA Australia PMI Services Jul F 52.3 51.9
AU CBA Australia PMI Composite Jul F 52.1 51.8
JN Jibun Bank Japan PMI Composite Jul F 51.2 51.2
HK Markit Hong Kong PMI Jul 43.8 47.9
JN Jibun Bank Japan PMI Services Jul F 51.8 52.3
AU Melbourne Institute Inflation MoM Jul 0.30% 0.00%
AU Melbourne Institute Inflation YoY Jul 1.80% 1.60%
CH Caixin China PMI Composite Jul 50.9 50.6
CH Caixin China PMI Services Jul 52 51.6 52
IN Markit India PMI Services Jul 53.8 49.6
IN Markit India PMI Composite Jul 53.9 50.8
SP Markit Spain Services PMI Jul 53.6 52.9 53.6
SP Markit Spain Composite PMI Jul 52 51.7 52.1
IT Markit Italy Services PMI Jul 50.6 51.7 50.5
IT Markit Italy Composite PMI Jul 50.1 51 50.1
FR Markit France Services PMI Jul F 52.2 52.6 52.2
FR Markit France Composite PMI Jul F 51.7 51.9 51.7
GE Markit Germany Services PMI Jul F 55.4 54.5 55.4
GE Markit/BME Germany Composite PMI Jul F 51.4 50.9 51.4
EC Markit Eurozone Services PMI Jul F 53.3 53.2 53.3
EC Markit Eurozone Composite PMI Jul F 51.5 51.5 51.5
UK New Car Registrations YoY Jul -4.10% -4.90%
EC Sentix Investor Confidence Aug -7 -13.7 -5.8
UK Markit/CIPS UK Services PMI Jul 50.3 51.4 50.2
UK Markit/CIPS UK Composite PMI Jul 49.8 50.7 49.7
UK Official Reserves Changes Jul $1749m $3650m
IT Istat Releases the Monthly Economic Note
US Markit US Services PMI Jul F 52.2 52.2
US Markit US Composite PMI Jul F 51.6
US ISM Non-Manufacturing Index Jul 55.5 55.1

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