CAPIS Global Markets 1/16/2019
Markets Focus on Brexit If you missed it, U.K. PM May’s Brexit deal was resoundingly rejected by Parliament. It was not a surprise the measure was voted down. However, the margin of defeat (432 nays vs. 202 ayes) was wider than expected. To put this in perspective, this is the largest margin of defeat in…
Markets Focus on Brexit
If you missed it, U.K. PM May’s Brexit deal was resoundingly rejected by Parliament. It was not a surprise the measure was voted down. However, the margin of defeat (432 nays vs. 202 ayes) was wider than expected. To put this in perspective, this is the largest margin of defeat in Parliament in the history of the U.K. Following the result, Labour Party leader Corbyn called for a non confidence vote which will be held today at 2PM Eastern. The has managed to hold steady for most of the morning. U.K. yields are higher with 10 yr. c. +7 basis points.
This caused the Asian markets to trade in mixed fashion. Part of the issue is no one is sure what the next step in the Brexit process will be. In fact, there are many who believe this will lead to a delay from the March 29th “deadline.” The PBoC injected a record CNY 560b into the financial system today which help support the Chinese markets. This was to meet the demand for upcoming tax payments and the Chinese New Year which commences in the first week of February.
In keeping with how the major indices had no clear direction, sectors were evenly split. IT and material names were the laggards but gave ground by less than 0.5%. In a flight to safety, healthcare gained about 0.5%.
The European markets have been to the upside as a whole. In addition to the Brexit delay mentioned above, there have been other factors that have created support. Despite some of the recent weak macroeconomic data, ECB Pres. Draghi indicates the region will avoid a recession. Also, Italian FM Tria sees the nation’s banks proceeding with non-performing loan reductions according to plan.
Those last two tidbits have prompted the banking and insurance sectors to advance by c. 1%. However, U.K. names are mostly lower. The majority of the remaining sectors are also better to one degree or another. Consumer staples and energy are off a tad than 0.5%.
Sector and Corporate Snippets
- Lenovo -3.3% surprised investors by increasing the size of a convertible bond issue to $675m from $550m.
- An undisclosed institutional investor has raised $278m by placing 231m Xiaomi -2.6% shares at HK$9.45.
- Underscoring the comments made by Italian FM Tria, Unicredit +2.6% has managed to reduce its non-performing exposure to 4.3% with a coverage ratio of 62.0%.
- In the logistics space, DSV +4.6% is bidding to acquire Panalpina Welttransport +31.0% at a 24.0% premium to yesterday’s close.
- Pearson -7.3% is at the bottom of the media space an Euro Stoxx 600. Its FY revenue update revealed a 5% decline in educational courseware.
- Under the radar? Greece also holds a confidence vote today.
On Our Side of the Pond
- Financial names dominate earnings this morning with Goldman, Bank of America, Bank of New York Mellon and Blackrock due.
- Fiserv and First Data have agreed to a $22b deal in the transaction processing and payment sector.
- SNAP slumping pre-market with CFO Stone resigning.
- McDonald’s has lost an Irish patent case in the EU. A CNBC commentator wondered is this would cause investors to “grimace.”
- Way south of the border, Embraer has cut guidance at an analyst meeting.
Markets and Macro
|AU||Westpac Consumer Conf Index||Jan||—||99.6||104.4||—|
|AU||Westpac Consumer Conf SA MoM||Jan||—||-4.70%||0.10%||—|
|JN||Core Machine Orders MoM||Nov||3.00%||0.00%||7.60%||—|
|JN||Core Machine Orders YoY||Nov||0.20%||0.80%||4.50%||—|
|CH||New Home Prices MoM||Dec||—||0.77%||0.98%||—|
|JN||Tertiary Industry Index MoM||Nov||-0.60%||-0.30%||1.90%||2.20%|
|GE||CPI MoM||Dec F||0.10%||0.10%||0.10%||—|
|GE||CPI YoY||Dec F||1.70%||1.70%||1.70%||—|
|GE||CPI EU Harmonized MoM||Dec F||0.30%||0.30%||0.30%||—|
|GE||CPI EU Harmonized YoY||Dec F||1.70%||1.70%||1.70%||—|
|EC||EU27 New Car Registrations||Dec||—||-8.40%||-8.00%||—|
|IT||Industrial Sales WDA YoY||Nov||—||0.60%||2.00%||—|
|IT||Industrial Sales MoM||Nov||—||0.10%||-0.50%||—|
|IT||Industrial Orders NSA YoY||Nov||—||-2.00%||2.00%||1.80%|
|IT||Industrial Orders MoM||Nov||—||-0.20%||-0.30%||-0.50%|
|UK||CPI Core YoY||Dec||1.80%||1.90%||1.80%||—|
|UK||Retail Price Index||Dec||286||285.6||284.6||—|
|UK||RPI Ex Mort Int.Payments (YoY)||Dec||2.80%||2.70%||3.10%||—|
|UK||PPI Input NSA MoM||Dec||-1.40%||-1.00%||-2.30%||-2.60%|
|UK||PPI Input NSA YoY||Dec||3.70%||3.70%||5.60%||5.30%|
|UK||PPI Output NSA MoM||Dec||0.00%||-0.30%||0.20%||0.10%|
|UK||PPI Output NSA YoY||Dec||2.90%||2.50%||3.10%||3.00%|
|UK||PPI Output Core NSA MoM||Dec||0.10%||0.20%||0.10%||—|
|UK||PPI Output Core NSA YoY||Dec||2.40%||2.50%||2.40%||—|
|UK||House Price Index YoY||Nov||3.00%||2.80%||2.70%||2.70%|
|IT||CPI FOI Index Ex Tobacco||Dec||102.1||102.1||102.2||—|
|IT||CPI EU Harmonized YoY||Dec F||1.20%||1.20%||1.20%||—|
|US||MBA Mortgage Applications||11-Jan||—||13.50%||23.50%||—|
|US||Retail sales data postponed by govt shutdown|
|US||Import Price Index MoM||Dec||-1.30%||—||-1.60%||—|
|US||Import Price Index ex Petroleum MoM||Dec||0.00%||—||-0.30%||—|
|US||Import Price Index YoY||Dec||-0.80%||—||0.70%||—|
|US||Export Price Index MoM||Dec||-0.70%||—||-0.90%||—|
|US||Export Price Index YoY||Dec||—||—||1.80%||—|
|US||Business inventories data postponed by govt shutdown|
|US||NAHB Housing Market Index||Jan||56||—||56||—|
|US||U.S. Federal Reserve Releases Beige Book|
|US||TIC Flows data postponed by govt shutdown|