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11.21.2019 10 new Morning Note posts under Morning Note (9) and General (1)

International Summary

News Trading Desk

International Summary

"CAPIS Unity Day Global Markets 10/03/2019"

posted by Matthew Kiselica on 10/03/2019 at 7:13 am

by Matthew Kiselica

10/03/2019 at 7:13 am

Markets Overview

The risk off mode continued in the Asian markets with several core indices seeing losses of 2%.  However, Hong Kong bucked the trend.  With a little more than an hour to go in the trading session, headlines hit that authorities would use emergency powers to ban protesters from wearing face masks.  The announcement sparked the Hang Seng Index to rally, erasing the day’s losses which at that point were about 0.4%.  The general feeling is this was less severe than anticipated.  The mainland Chinese markets remain closed with S. Korea also observing a holiday.

The majority of sectors end the day to the downside.  Materials are off c. 1% followed by healthcare, industrials and consumer discretionary.  Utilities is the only sector managing a small advance while real estate was down small.

The European markets have at least halted the selling tide.  They dipped on the open but then managed a small uptick.  They have since waffled following various Markit Service and Composite PMI readings.  Given the poor manufacturing readings last week, it should come as no surprise the German and EU Composite readings are low.  The EU remains barely above 50 but Germany’s was further below 50 than expected.  Germany is closed for trading to honor Unity Day.  The U.K. results for both Services and the Composite are unexpectedly below 50.  Another negative for the markets are comments from PM Johnson regarding Brexit.  In his presentation to Parliament, he says a resolution is “some way off.”  Ireland remains critical of his plans for the border with Northern Ireland.

Several sectors are receiving a boost despite new U.S. tariffs following yesterday’s WTO ruling permitting them on $7.5b of EU goods.  Those benefiting with levies better than feared include distillers, luxury-leather good providers and Airbus +3.3%.  Overall, sectors are evenly split.  Energy and media are off slightly more than 0.6%.  Food/bevies move higher more than 0.5% followed by tech.

Following the European macro data, the debt markets are seeing most EU core yields falling.  In general, they are lower between 3 to 5 basis points.

Corporate Snippets

  • The Japanese weekly Shukan Bunshun reports Softbank -2.0% is mulling a bid for Line Corp. 5.4%.  The story cites a banker close to the situation.  It does not say if any formal approach has been make.  Both companies have declined to comment.
  • Same store domestic sales at Fast Retailing’s -3.9% Uniqlo unit are 4.2% lower y/y for the month of September.
  • The over-allotment option for Budweiser Asia’s -0.3% IPO has been exercised.
  • After the local close, Tokio Marine announces it is purchasing Pure Group for $3.1b.   It is a privately held U.S. insurance company.
  • Ted Baker -36.0% is falling sharply following a profit warning.  The company’s H1 revenues are lower by 0.7% y/y.  More importantly, it sees H2 results lower y/y if current trends persist.
  • H&M +6.2% performs better in the retail space.  Its Q3 PTP of SEK 5.01b is a 25.0% improvement y/y and a touch better than consensus.  Gross & operating margins also are ahead of expectations.
  • Imperial Brands +0.2% CEO Cooper will step down from her post “once a suitable successor” can be recruited.   She has been at the helm of the company for 9 years.

On Our Side of the Pond

  • After yesterday’s close, E*Trade announces it will join the zero commission club for equities, ETFs and options.
  • Also after yesterday’s close, Tesla reports Q3 deliveries of 97,000 units.  That is ahead of consensus and a record for the company.  However, it is short of Elon Musk’s mark of 100k.  The shares are trading lower pre-market.
  • PepsiCo is trading better.  The company says it will meet or exceed its organic revenue growth target of 4%.
  • Constellation Brands Q2 comparable net sales are $2.34b which is inline with estimates.  More figures hitting the tape as we go to publication.
  • Costco out after the close.
  • There is plenty of macro due including Initial Jobless Claims, Markit Service and Composite PMIs, Factory Orders and Durable Goods.

Markets & Macro

Markets Snapshot

 

Event Survey Actual Prior Revised
AU AiG Perf of Services Index Sep 51.5 51.4
AU CBA Australia PMI Services Sep F 52.4 49.1
AU CBA Australia PMI Composite Sep F 52 51.9
JN Japan Buying Foreign Bonds 27-Sep ¥869.2b -¥164.0b -¥164.8b
JN Japan Buying Foreign Stocks 27-Sep ¥320.9b -¥106.3b
JN Foreign Buying Japan Bonds 27-Sep ¥400.4b -¥3148.6b
JN Foreign Buying Japan Stocks 27-Sep -¥221.2b -¥1177.8b -¥1178.0b
JN Jibun Bank Japan PMI Services Sep F 52.8 52.8
JN Jibun Bank Japan PMI Composite Sep F 51.5 51.5
AU Trade Balance Aug A$6100m A$5926m A$7268m A$7253m
SP Markit Spain Services PMI Sep 53.9 53.3 54.3
SP Markit Spain Composite PMI Sep 52.1 51.7 52.6
IT Markit Italy Services PMI Sep 50.5 51.4 50.6
IT Markit Italy Composite PMI Sep 50 50.6 50.3
FR Markit France Services PMI Sep F 51.6 51.1 51.6
FR Markit France Composite PMI Sep F 51.3 50.8 51.3
GE Markit Germany Services PMI Sep F 52.5 51.4 52.5
GE Markit/BME Germany Composite PMI Sep F 49.1 48.5 49.1
EC Markit Eurozone Services PMI Sep F 52 51.6 52
EC Markit Eurozone Composite PMI Sep F 50.4 50.1 50.4
UK Markit/CIPS UK Services PMI Sep 50.3 49.5 50.6
UK Markit/CIPS UK Composite PMI Sep 50 49.3 50.2
UK Official Reserves Changes Sep $475m $1918m
EC PPI MoM Aug -0.30% -0.50% 0.20% 0.10%
EC PPI YoY Aug -0.40% -0.80% 0.20% 0.10%
EC Retail Sales MoM Aug 0.30% 0.30% -0.60% -0.50%
EC Retail Sales YoY Aug 2.00% 2.10% 2.20%
US Challenger Job Cuts YoY Sep 39.00%
US Initial Jobless Claims 28-Sep 215k 213k
US Continuing Claims 21-Sep 1654k 1650k
US Bloomberg Consumer Comfort 29-Sep 61.7
US Markit US Services PMI Sep F 50.9 50.9
US Markit US Composite PMI Sep F 51
US ISM Non-Manufacturing Index Sep 55 56.4
US Factory Orders Aug -0.20% 1.40%
US Factory Orders Ex Trans Aug 0.30%
US Durable Goods Orders Aug F 0.20%
US Durables Ex Transportation Aug F 0.50%
US Cap Goods Orders Nondef Ex Air Aug F -0.20%
US Cap Goods Ship Nondef Ex Air Aug F 0.40%

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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