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International Summary

"CAPIS Global Recap – 10/31/2019"

posted by Clayton Duff on 10/31/2019 at 7:45 am

by Clayton Duff

10/31/2019 at 7:45 am

Asian Headlines

Asian indices closed mixed post the interest move in the States with mainland China underperforming. IT names there lagged, doing the same in Japan despite the Nikkei up on the session.  This after both Apple and Facebook reported good quarterly results.  Official Manufacturing PMI was possibly the culprit in China with the reading of 49.3 light vs the 49.8 expected as it remains in contraction.  Non-manufacturing also missed with smaller company Caixin readings expected Thursday night.  At midnight EST, the China Commerce Ministry noted trade negotiations with the US were going well. Hong Kong pared their base rate to 2.00% (25bps cut).   Post the close GDP was shown to be down 2.9% for the 3Q, well worse than the -.3% expected. Headlines noted they are now in a technical recession which it has not seen since 2009.  HSBC pared their lending rate on the move.

The BoJ left their rates unchanged at -.10%, retaining asset purchases as-is. They reiterated low or even lower rates to prevent any momentum towards achieving price stability from being lost. Post the announcement GDP for the next several years along with CPI views were again pared.

Other headlines to note include:

  • AAC Tech closed up 3.5% post the Apple results.  The IT sector was up over 6% in Hong Kong today.
  • Telecom services were strong on the mainland with commercial 5G expected to kick off tomorrow.
  • Earnings in Japan post the close include Tokyo Electron, Takeda, Japan Tobacco, Keyence, Panasonic with a host of others out as well.
  • Samsung closed flat after it earlier reported 3Q readings that showed a sizable drop YoY in their chip business. CAPEX spending remains strong with the firm noting DRAM and NAND bit growth should be stronger than expected.
  • North Korea again lobbed two missiles into the Sea of Japan.
  • The Financial Times said China is ending its plans to merge ChemChina and SinoChem. US concern over some of their holding was cited (Switzerland’s Syngenta) along with the melding of management. Instead, SinoChem will probably acquire just some of ChemChina’s assets.

European Headlines

European markets showed promise early on but moved lower on headlines an hour into the session out of China. A press story noted China does not think it can reach a full, long-term deal with President Trump. They are said to be demanding an end to tariffs before any phase 2 discussions.  Further China is said to be unwilling to give in on big structural changes.  With that said all markets are lower with only the sectors of Utilities, Travel, Food, and Telcos higher.   Autos and Basic Resources lead lower.  GDP for the region held steady in the 3Q with CPI doing the same.

Earnings are still front and center with several headlines to note:

  • Fiat +8% is the lone winner in the auto space today with sizable losses elsewhere.  Yesterday of course they and PSA (Peugeot) -12% agreed to merge on a 50/50 deal.   Fiat shareholders are seen receiving a €5.5B special divi out of the deal with a Jefferies analyst noting that plays into his view that PSA is paying a 32% premium for FCA.  Market participants no doubt agree that Fiat is getting the better of the deal as evidenced by the sharp drop in PSA shares today.  Renault -3.3% as it is left out in the cold.
  • Volkswagen -2% earlier reported better 3Q adj operating profit but pared its FY delivery target to inline with 2018.  They cited lower demand which they admit took them by a bit of surprise.
  • Air France flat saw op profit light vs estimates with a weakened outlook.  They cited lower cargo transport demand with a lower demand in pricey last-minute bookings over the summer.

Event Survey Actual Prior Revised
SK 57) Industrial Production SA MoM Sep 0.50% 2.00% -1.40% -1.80%
SK 58) Industrial Production YoY Sep -1.90% 0.40% -2.90% -3.30%
SK 59) Cyclical Leading Index Change Sep 0.1 -0.1 0
JN 60) Japan Buying Foreign Bonds 25-Oct -¥1018.5b ¥536.1b ¥513.8b
JN 61) Japan Buying Foreign Stocks 25-Oct ¥1.4b ¥42.3b ¥42.4b
JN 62) Foreign Buying Japan Bonds 25-Oct ¥26.0b ¥127.2b ¥127.4b
JN 63) Foreign Buying Japan Stocks 25-Oct ¥649.5b ¥522.3b ¥522.4b
JN 64) Industrial Production MoM Sep P 0.40% 1.40% -1.20%
JN 65) Industrial Production YoY Sep P -0.10% 1.10% -4.70%
UK 66) GfK Consumer Confidence Oct -13 -14 -12
AU 67) Building Approvals MoM Sep 0.00% 7.60% -1.10% -0.60%
AU 68) Building Approvals YoY Sep -25.70% -19.00% -21.50% -21.10%
AU 69) Import Price Index QoQ 3Q 0.50% 0.40% 0.90%
AU 70) Export Price Index QoQ 3Q -0.50% 1.30% 3.80%
AU 71) Private Sector Credit MoM Sep 0.30% 0.20% 0.20%
AU 72) Private Sector Credit YoY Sep 2.70% 2.70% 2.90%
CH 73) Composite PMI Oct 52 53.1
CH 74) Manufacturing PMI Oct 49.8 49.3 49.8
CH 75) Non-manufacturing PMI Oct 53.6 52.8 53.7
JN 76) BOJ Policy Balance Rate 31-Oct -0.10% -0.10% -0.10%
JN 77) BOJ 10-Yr Yield Target 31-Oct 0.00% 0.00% 0.00%
JN 78) BOJ CPI Current Forecast +2 4Q 1.50% 1.60%
JN 79) BOJ GDP Current Forecast +1 4Q 0.70% 0.90%
JN 80) BOJ CPI Current Forecast +1 4Q 1.10% 1.30%
JN 81) BOJ GDP Current Forecast 4Q 0.60% 0.70%
JN 82) BOJ GDP Current Forecast +2 4Q 1.00% 1.10%
JN 83) Vehicle Production YoY Aug -2.20% 11.80% 11.70%
JN 84) Housing Starts YoY Sep -6.70% -4.90% -7.10%
JN 85) Annualized Housing Starts Sep 0.878m 0.897m 0.891m
JN 86) Construction Orders YoY Sep -6.80% -25.90%
JN 87) Consumer Confidence Index Oct 35.3 36.2 35.6
FI 88) House prices have new methodology, data not comparable
NO 89) Credit Indicator Growth YoY Sep 5.50% 5.80% 5.50%
GE 90) Retail Sales MoM Sep 0.20% 0.10% 0.50% -0.10%
GE 91) Retail Sales NSA YoY Sep 3.30% 3.40% 3.20% 3.10%
FI 92) Trade Balance Aug F -245m -240m
DE 93) Unemployment Rate SA Sep 3.10% 3.10%
DE 94) Unemployment Rate Gross Rate Sep 3.80% 3.70% 3.80% 3.70%
FR 95) CPI EU Harmonized MoM Oct P 0.10% -0.10% -0.40%
FR 96) CPI EU Harmonized YoY Oct P 1.10% 0.90% 1.10%
FR 97) CPI MoM Oct P 0.10% -0.10% -0.30%
FR 98) CPI YoY Oct P 0.90% 0.70% 0.90%
SP 99) GDP QoQ 3Q P 0.40% 0.40% 0.40%
SP 100) GDP YoY 3Q P 2.00% 2.00% 2.00%
HK 101) GDP YoY 3Q A -0.30% -2.90% 0.50%
HK 102) GDP SA QoQ 3Q A -0.60% -3.20% -0.40%
HK 103) Budget Balance HKD Sep -53.4b -14.8b
NO 104) Norges Bank Daily FX Purchases Nov -700m -700m
IC 105) Trade Balance Sep F -17548m -17100m
IT 106) Unemployment Rate Sep P 9.60% 9.90% 9.50% 9.60%
PO 107) CPI MoM Oct P 0.10% 1.10%
PO 108) CPI YoY Oct P 0.00% -0.10%
PO 109) CPI EU Harmonized MoM Oct P -0.30% 1.40%
PO 110) CPI EU Harmonized YoY Oct P -0.10% -0.30%
GR 111) Retail Sales YoY Aug 1.20% -2.70% -1.90%
IT 112) CPI EU Harmonized MoM Oct P 0.10% 0.20% 1.50% 1.40%
IT 113) CPI NIC incl. tobacco MoM Oct P -0.10% 0.00% -0.50% -0.60%
IT 114) CPI NIC incl. tobacco YoY Oct P 0.30% 0.30% 0.40% 0.30%
IT 115) CPI EU Harmonized YoY Oct P 0.20% 0.20% 0.20%
BE 116) Unemployment Rate Sep 5.60% 5.50%
EC 117) Unemployment Rate Sep 7.40% 7.50% 7.40% 7.50%
EC 118) GDP SA QoQ 3Q A 0.10% 0.20% 0.20%
EC 119) GDP SA YoY 3Q A 1.10% 1.10% 1.20%
EC 120) CPI MoM Oct P 0.10% 0.20% 0.20%
EC 121) CPI Estimate YoY Oct 0.70% 0.70% 0.90% 0.80%
EC 122) CPI Core YoY Oct P 1.00% 1.10% 1.00%
HK 123) Money Supply M1 HKD YoY Sep -3.50% -4.40%
HK 124) Money Supply M2 HKD YoY Sep 1.90% 1.80%
HK 125) Money Supply M3 HKD YoY Sep 1.80% 1.90%
IN 126) Fiscal Deficit INR Crore Sep 97714 6235
IT 127) GDP WDA YoY 3Q P 0.20% 0.30% -0.10% 0.10%
IT 128) GDP WDA QoQ 3Q P 0.00% 0.10% 0.00% 0.10%
IN 129) Eight Infrastructure Industries Sep -5.20% -0.50%

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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