Asian Markets

The core Asian markets had a solid day especially Japan which need to play catch up following yesterday’s holiday.  Peripherals lagged.  Continued trade talk optimism is being given additional by a tentative budget/border agreement in the States.  The majority of sectors finished the day to the upside.  Healthcare led followed by gains of at least 1% among industrials, consumer discretionary, materials and IT.  Real estate was the only laggard of note giving ground by c. 0.3%.

The BoJ is reducing JBG purchases in the 10 to 25 yr. maturity range.  The central bank is doing so to halt falling yields.  Ironically, today marks the 2o year anniversary of its extensive quantitative easy policy (CNBC).

Other Headlines from the Region

• The healthcare gains were primarily drive by Chinese pharmaceutical companies.  China is pledging various incentives for companies to develop cancer and rare disease treatments.
• Toshiba -5.9% confirmed yesterday’s Nikkei report the company needed to cut it OP outlook.
• NCSoft’s -4.2% NI and OP are below the range of estimates.   Revenues are below consensus but at least within the range.  The company’s newer game offerings have lagged projections.
• Geely Auto’s +4.4% January sales rose 2%, beating estimates in both wholesale and retail numbers. CICC and Morgan Stanley both raised their respective price targets.
• Renesas Elec. % traded limit up following results which were reassuring despite the company noting weaker sales and OP Q/Q.  The company’s OP for FY ’18 reached ¥10.1b vs. the its own forecast ¥2.5b.
• After the close, Nissan Motors cut is profit forecasts noting slower U.S. and Chinese sales.

European Markets

Europe has spent the entire session to the upside generally higher about 0.6% for most of the day.  The markets saw most sectors trade to the upside.   Autos ended the day better by c. 3% with chemical better c. 1.5% followed by retail.   Travel/leisure was off about 1% due to results and stronger energy markets.

The Brexit saga continues with PM May once again speaking to Parliament.  But that isn’t the day’s only political intrigue.  Spain’s parliament debates the currency budget proposal.  If it is rejected, that would lead to new elections.  Stay tuned….

Important Snippets from the Region

• Along with trade hopes, Michelin +13.0% drove the gains for the auto sector.  Q4 at Clayton’s favorite tire manufacturer saw improved cost savings while volumes held up better than feared.  Both OP and FCF beat expectations.  The company expects earnings to grow in the current fiscal year.   Elsewhere in the sector, Renault % underperformed due to the Nissan comments highlighted in the Asian section.
• Thyssenkrupp’s  -2.0% FY ’19 is off to a weak start and FCF is negative.  While order intake showed improvement, their are doubts it will trickle down to the bottom line.

On Tonight’s Agenda for the Markets

• After today’s close, KDDI announced a tender off for 49% of Kabu.com.
• Both Sweden and New Zealand have rate decisions and the UK will post CPI.
• Earnings due include Heineken, Sands China, Deutsche Boerse, Akzo Nobel, Barrick Gold, Teva Pharma and KEPCO to name a few.

Markets and Macro