Top Down Markets
Most of the core Asian markets had a decent day managing to advance. The mainland Chinese exchanges led the way with Pres. Trump making some promising if somewhat vague trade comments. Hong Kong lagged throughout the day due to protests at Hong Kong International airport. It moved 25 bps lower during the closing auction as headlines hit the tape. Authorities announced all flights from the airport were cancelled. Additionally, the protests were referred to as terrorism. This unsettled the rest of the markets that remained open, as you will see. Japan was closed of Mountain Day.
Europe has a solid start with the Euro Stoxx 600 advancing by c. 1% and all sectors were green. However, the markets started paring the advance on the Hong Kong headlines and are now in the red across the board. Also, hurting sentiment is Chinese new CNY data for July. They are CNY 1,060b vs. CNY $1,275b expected.
With most of the core markets closed by the time the Hong Kong headlines hit, most Asian sectors end the day higher. IT and consumer staples improved by c. 1%. Utilities, real estate and basic resources lagged. European sectors have seen a dramatic change from the gains noted above. Most are now red to one extent or the other. Banks are lower by more than 1% with autos, retail, personal goods, et. al, off 0.5% or more. Insurance, healthcare and food/bevies have small gains.
Markets for other financial instrument are seeing risk-off sentiment rising. The ¥ and gold are advancing. Crude dips and bond yields are falling. The £ rises on reports members of parliament are pushing PM Johnson to ask for a Brexit extension.
- The protests at Hong Kong International Airport put pressure on Cathy Pacific -4.8%. Not helping is a report a state owned company is instructing employees not to fly the carrier. Employees have taken part in some of the recent anti-government protests.
- Switzerland’s AMS ag -8.8% thinks its a bright idea to make another bid for Ostam Licht +9.9%. They are bidding €38.50 per share vs. the €35 per share made by a PE consortium of Bain Capital and Carlyle Group.
- Recently being highlighted as the front runner, Sandvik -1.9% CEO Rosengren will take the top role at ABB +3.9%.
- Salzgitter’s -5.0% Q2 results are inline with expectations. However, the company is cutting its FY sales forecast. It now sees them at better than €9b vs. the prior outlook of better than €9.5b. Also, while maintaining its FY PTP range verbage implying they would be at the top end of the range was dropped.
On Our Side of the Pond
- Way South of the Border in Argentina, Pres. Macri suffered a shocking defeat in primary elections. Argentine bonds are collapsing in Europe.
- Barrick Gold’s trading higher post results with a 27% increase in output. The company remains on track to sell $1.5b of assets while still eyeing Canadian prospects.
Markets & Macro
|CA||Bloomberg Nanos Confidence||9-Aug||—||—||58.6||—|
|US||Monthly Budget Statement||Jul||-$120.0b||—||-$76.9b||—|
|AU||ANZ Roy Morgan Weekly Consumer Confidence Index||11-Aug||—||—||115.8||—|
|AU||NAB Business Conditions||Jul||—||—||3||—|
|AU||NAB Business Confidence||Jul||—||—||2||—|
|SK||Money Supply L SA MoM||Jun||—||—||0.30%||—|
|SK||Money Supply M2 SA MoM||Jun||—||—||0.40%||—|
|SK||Bank Lending To Household Total||Jul||—||—||KR848.9t||—|
|JN||Tertiary Industry Index MoM||Jun||-0.10%||—||-0.20%||—|
|CH||Aggregate Financing CNY||Jul||1625.0b||1010.0b||2260.0b||2262.9b|
|CH||Foreign Direct Investment YoY CNY||Jul||—||—||8.50%||—|
|US||MBA Mortgage Foreclosures||2Q||—||—||0.92%||—|
|CH||New Yuan Loans CNY||Jul||1275.0b||1060.0b||1660.0b||1663.6b|
|CH||Money Supply M0 YoY||Jul||4.40%||4.50%||4.30%||—|
|CH||Money Supply M1 YoY||Jul||4.70%||3.10%||4.40%||—|
|CH||Money Supply M2 YoY||Jul||8.40%||8.10%||8.50%||—|
|GE||Wholesale Price Index YoY||Jul||—||—||0.30%||—|