CAPIS Global Markets 1/08/2019
Asian Markets Varied performance across the region as the markets await word regarding the Sino-U.S. trade talks. Comments thus far indicate an agreement can be reached by the March 1st “trade war truce” deadline. However, there has been nothing concrete for investors to seek their teeth into. There were a number of key corporate results…
Varied performance across the region as the markets await word regarding the Sino-U.S. trade talks. Comments thus far indicate an agreement can be reached by the March 1st “trade war truce” deadline. However, there has been nothing concrete for investors to seek their teeth into. There were a number of key corporate results which impacted and we will those below address below.
Correspondingly, sectors were also mixed. Telcos, utilities and health care had gains of c. 0.5% or a touch better. Consumer staples were off about the same.
- Samsung Elec. -1.7% spent most of the session to the down side following its Q4 results and outlook. The company’s Q4 OP was only KRW 10.8t vs. consensus of KRW 13.8t. Revenues also missed, falling 11% to KRW 59t vs. KRW 63.6t expected. The coup de grace was the company indicating the start of FY ’19 will continue to see weakness.
- LG Elec.’s -3.6% also disappointed the market. The consumer electronics maker suffered a 7% decline to sales with Q4 earnings only KRW 75.3b. The was well below estimates of KRW 387m.
- Geely Auto % drove the auto sector lower after forecasting FY ’19 sales will be flat. There were multiple broker price target and estimates cuts along with ratings agency responses. In addition to the Chinese producers, this has repercussions for the global auto makers looking to ramp up sales in China.
- Also in China, Evergrande’s -3.1% FY ’19 prompted profit taking in among real estate names. The company sees “modest sales growth” this year. The sector has been in favor the past few sessions on positive broker commentary.
- According to the FT, Softbank +1.9% has elected to forego taking a controlling stake in WeWork. Instead, it will invest $2b vs. the initial indications of $16b. The article alleges key investors questioned the merits of the larger investment.
The region opened higher following word the Italian government would guarantee any new debt issued by troubled Banca Caribe. This helped investors overlook German industrial output which unexpectedly declined during November. The markets moved to their highs following word from the Chinese Commerce Ministry they would issue statement regarding the trade talks. That hit the tape about 6 AM Eastern but at present nothing has been disseminated and no time has been set for the commentary. Stay tuned…..
With the exception of telcos, all major sectors are higher. Retail is better by more than 2%. A host of sectors are higher by at least 1% including industrials, media, tech, travel/leisure, personal goods and insurance.
- An Indian court has ruled that Bayer’s +2.15% Monsanto unit’s patent on genetically modified cotton seeds is valid.
- William Morrison’s -3.0% Christmas sales lagged consensus. 9 week sale during the period ex-petrol only advanced 3.6% with the market looking for a 4% gain. Morrison’s noted customers opted for discount providers and the lack of clarity regarding Brexit is making consumers cautious.
- Embattled Renault +2.0% Chairman Ghosn has made his first public statements in court today following his arrest for corruption charges in Japan. He stated the allegations made by Nissan are erroneous and his lawyers are petitioning for his release.
On Our Side of the Pond
- President Trump will address the nation this evening to discuss the budget and his demand for the border wall.
- Due to the government shutdown, trade balance data due today will be postponed.
Markets and Macro
|AU||ANZ Roy Morgan Weekly Consumer Confidence Index||6-Jan||—||115.2||117.8||—|
|SK||BoP Current Account Balance||Nov||—||$5063.4m||$9190.3m||—|
|SK||BoP Goods Balance||Nov||—||$7974m||$10997m||—|
|AU||ANZ Job Advertisements MoM||Dec||—||0.00%||-0.30%||-0.40%|
|JN||Consumer Confidence Index||Dec||42.8||42.7||42.9||—|
|GE||Industrial Production SA MoM||Nov||0.30%||-1.90%||-0.50%||-0.80%|
|GE||Industrial Production WDA YoY||Nov||-0.80%||-4.70%||1.60%||0.50%|
|FR||Current Account Balance||Nov||—||-2.8b||-0.7b||-0.3b|
|UK||Halifax House Prices MoM||Dec||0.50%||2.20%||-1.40%||-1.20%|
|UK||Halifax House Price 3Mths/Year||Dec||0.40%||1.30%||0.30%||—|
|EC||Consumer Confidence||Dec F||-6.2||-6.2||-6.2||—|
|EC||Business Climate Indicator||Dec||1||0.82||1.09||1.04|
|US||NFIB Small Business Optimism||Dec||103||104.4||104.8||—|
|CA||Int’l Merchandise Trade||Nov||-2.15b||—||-1.17b||—|
|US||Trade balance data postponed by government shutdown|
|US||JOLTS Job Openings||Nov||7050||—||7079||—|