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11.12.2019 11 new Morning Note posts under Morning Note (9), General (1), International Summary (1)

International Summary

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International Summary

"CAPIS Global Recap – 8/23/2019"

posted by Clayton Duff on 08/23/2019 at 7:04 am

by Clayton Duff

08/23/2019 at 7:04 am

Asian Headlines

Asia wrapped up the week with mostly small gains in the region. Consumer goods led in Japan while Health Care took the lead in Hong Kong and the mainland.  IT names slipped in both markets.  Markets today are focused on the G7 meeting as well as any comments out of Jackson Hole, Wyoming, especially those from Fed Chair Powell.   Comments from WH Eco Adviser Kudlow noted positive talks this week with China as further calls are expected in the days ahead. And speaking of talks, President Trump may talk trade with PM Abe at the G7 even as discussions between the two continue.   As protests have been considerably more peaceful, markets do not seem to be as concerned with the additional protests scheduled for today in Hong Kong.

  • Toyota +.1% will up the prices of steel it supplies to parts-makers by ¥4000 a ton as labor shortages have upped prices.  Higher iron ore prices have also contributed.  Japan Steel +2.8%, Shima Seiki +1.4%.
  • Li & Fung rose 3% despite 1H revenues down 8%. Core operating profit was down 19% YoY to $105M with management noting it expects to benefit from the trade war by helping clients diversify their supply chains away from China.  They noted they helped one US retailer cuts its Chinese reliance down to 20% from 70%.
  • AAC Tech fell 4% post weaker 2Q revs, NI, and gross margins.  The company said 5G spending will help it get back into a leadership position, adding business operations have been little affected by the trade war.

European Headlines

European indices are holding onto small gains today with levels just under the highs of the last couple of days.  Travel names join Media and Tech with gains of at least a percent with broad strength across sectors.  Energy is the only weaker sector with oil prices slightly lower.  Indices pulled back a bit but have recovered with a news story out noting a deal between the US and China is seen as “tough to improbable” citing a deteriorating environment and escalating security tensions.  Further, a Chinese press story stated countermeasures against the US are on tap soon.  Turnover is sharply lower with Powell to speak at 10 EST.  Some traders may have left already for the long weekend with the UK shut Monday for a bank holiday.

On the Brexit front, yesterday Germany’s Merkel made comments about the continuing talks between the EU and UK.  However some commentators noted those close to her believe she knows that a no-deal Brexit will be the ultimate result.  With that said French President Macron and PM Johnson continue their discussions. Italy is sitting on slight gains with President Mattarella insisting elections are a choice that should not be taken lightly.

  • German steel producer Kloeckner is up 7.5% with ThyssenKrupp +.4% said to be interested. Salzgitter +.3% is also said to be possibly in Thyssen’s view.
  • The US’ Hasbro has bid for the UK’s Entertainment One +35% but shares are surpassing the bid price with hopes of a higher bid to come.  The producer of Peppa Pig is said to be a possible target by others including Netflix or the Discovery network.  Character Group -17%.
  • Denmark’s Rockwool is off 15% after FY revs were pared with ebit for the year seen as inline with last year’s levels. Morgan Stanley said the firm appears to be losing market share to foam insulation competitors.

Event Survey Actual Prior Revised
JN 24) Natl CPI YoY Jul 0.60% 0.50% 0.70%
JN 25) Natl CPI Ex Fresh Food YoY Jul 0.60% 0.60% 0.60%
JN 26) Natl CPI Ex Fresh Food, Energy YoY Jul 0.50% 0.60% 0.50%
CH 27) Bloomberg Aug. China Economic Survey (Table)
DE 28) Retail Sales YoY Jul 2.40% -1.10% -1.30%
DE 29) Retail Sales MoM Jul -0.20% 0.50% 0.40%
AS 30) Industrial Production SA MoM Jun 0.50% -1.00% -0.90%
AS 31) Industrial Prod. WDA YoY Jun 1.30% -0.30% -0.40%
SW 32) SURVEY REPORT: Swedis Growth Cut, Rate Hike Pushed Back
IC 33) Wage Index MoM Jul 0.30% -0.10%
IC 34) Wage Index YoY Jul 4.20% 4.30%
NO 35) SURVEY REPORT: Economists Push Back Norges Bank Hike Forecast
BE 36) Business Confidence Aug -6 -5

About the Author

Clayton Duff headshot
ClaytonDuffFVP,Senior International Trader

Clayton Duff joined the firm in 2008. He has worked in the industry since 1994 and held various trading and sales positions before CAPIS, including four years as a trader for First Southwest. He earned his bachelor’s degree from the University of Texas Arlington. Clayton maintains Series 3,...

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