Asian indices saw subdued moves overnight, a welcome session in light of recent weakness and volatility. The Yuan is weaker today as the PBoC setting the reference rate to 6.9996 vs the prior 6.9683 level. A financial story out noted banks there were buyers of USD. Central bank moves are in focus elsewhere with New Zealand’s RBNZ lowering their cash rate by 50bps, to 1.0%, as a 25bps cut was expected. Governor Orr said the move was a strategic one adding negative rates could be utilized if needed. On that, the Kiwi Dollar fell to levels not seen since last October but have recovered somewhat today.
In the sector space, Utilities led on the Nikkei along with Health Care while Materials and IT slipped. Utilities led in Hong Kong as well with Industrials lagging. Conversely, Materials led in China with IT and Communication weaker. Down Under, Real Estate and Consumer goods rallied, this after mixed home loan readings.
In individual names Softbank – .2% closed near flat post reporting 1Q op income sharply ahead of estimates. Much of the gain was from a ¥856.8B gain from its 2016 Aliaba share sale. Son said he sees 5-6 IPOs from the Vision fun this year with 10 expected next year.
Chipmaker Sumco fell 9% post missing estimates. They forecast 3Q op income at only ¥8B, well light vs the ¥14.4B expectation. Restrictions on Huawei are trickling down to them with Citi downgraded the name to Sell. Several reasons cited included chip material export restrictions and the subsequent removal from the favored trade list along with general macroeconomic deterioration.
Post the close China reported a small paring of foreign reserves, to $3.104T vs the $3.105T estimate while gold reserves rose. Like the RBNZ, Thailand’s central bank also lowered rates, cutting to 1.5%, as expected, from 1.75%. Baht strength was noted as a concern with inflation seen missing their 2019 target. Post yesterday’s 35bps cut by India’s RBI, Gov Das said a 25bp cut was inadequate with a 50bp cut seen as excessive. He said further cuts will be calibrated.
European indices have steadily worked higher with broad gains sector-wise. Tech and Construction names lead with only the Basic Resources sector down despite Gold and Copper to the upside. 533 of the Stoxx 600 names are to the upside with turnover up slightly. On the economic front German Industrial Production fell 1.5% MoM, after a slight gain in May. With the easing noted above bond yields continue to slip with with German 10 year holding just above 2% while the UK Gilt is at 1.67%.
News concerning earnings and other headlines include Commerzbank -3% which met 2Q operating earnings estimates. Revenues too were inline but the firm stated its FY NI goal is “significantly more ambitious”. They did note that cost reduction targets will be met adding negative rates have not hurt the firm. Unicredit -3.8% missed on 2Q NI and subsequently lowered their FY revenue guidance to €18.7B from €19B. Trading profit was off 19% YoY.
Bayer +7% is moving in a different direction today, up, as it will sell a JV with Lanxess +6% to Macquarie. The €3.5B deal will see Bayer freeing up cash as they offload Currenta which they call a non-core business unit. Additionally, the next Glyphosate trial appears to be postponed.
Lower again, corporate financing firm Burford Capital is off 48%. The firm has said their cash position is strong and access to additional funds is sufficient as Muddy Waters calling the name a short. Its use of fair value accounting is said to be in focus with Burford threatening appropriate legal action if actionable misconduct is found. The firm is off over 60% in just three days.
Shipper Hapag-Lloyd is up 17% on encouraging earnings. This allowed the firm to reiterate FY estimates as freight rates are to the upside.
|AU||15)||AiG Perf of Construction Index||Jul||—||39.1||43||—|
|JN||16)||Official Reserve Assets||Jul||—||$1316.5b||$1322.3b||—|
|AU||17)||Home Loans MoM||Jun||0.50%||0.40%||-0.10%||-0.40%|
|AU||19)||Owner-Occupier Loan Value MoM||Jun||-1.00%||2.40%||-2.70%||-3.00%|
|SZ||20)||UBS Real Estate Bubble Index||2Q||—||0.78||0.83||0.8|
|DE||21)||Industrial Production MoM||Jun||—||-6.80%||3.50%||4.20%|
|GE||22)||Industrial Production SA MoM||Jun||-0.50%||-1.50%||0.30%||0.10%|
|GE||23)||Industrial Production WDA YoY||Jun||-3.10%||-5.20%||-3.70%||—|
|IN||24)||RBI Repurchase Rate||7-Aug||5.50%||5.40%||5.75%||—|
|IN||25)||RBI Reverse Repo Rate||7-Aug||5.25%||5.15%||5.50%||—|
|IN||26)||RBI Cash Reserve Ratio||7-Aug||4.00%||4.00%||4.00%||—|
|FR||28)||Current Account Balance||Jun||—||-0.8b||0.3b||—|
|SP||29)||House transactions YoY||Jun||—||-9.00%||1.10%||—|
|SZ||30)||Foreign Currency Reserves||Jul||—||767.9b||759.1b||759.8b|
|AS||31)||Wholesale Price Index MoM||Jul||—||0.40%||-1.60%||—|
|AS||32)||Wholesale Price Index YoY||Jul||—||-0.30%||-0.70%||—|
|UK||33)||Halifax House Prices MoM||Jul||0.30%||-0.20%||-0.30%||-0.40%|
|UK||34)||Halifax House Price 3Mths/Year||Jul||4.40%||4.10%||5.70%||—|
|IC||38)||Trade Balance||Jul P||—||-18600m||-28563m||—|