CAPIS Global Markets 3/11/2018
Asian Markets Most of region advanced seeing a bounce from Friday’s sharp declines. The Chinese markets led the way due to several factors: Trade chatter, supportive comments from PBoC Gov. Yi and benign inflation data. India set national elections to be conducted in various phases between April 11th and May 19th. The final results will…
Most of region advanced seeing a bounce from Friday’s sharp declines. The Chinese markets led the way due to several factors: Trade chatter, supportive comments from PBoC Gov. Yi and benign inflation data. India set national elections to be conducted in various phases between April 11th and May 19th. The final results will be disclosed on May 23rd.
PBoC Gov. Yi says the U.S. and China have reached “consensus” on “crucial” topics. He specifically mentioned the yuan and G-20 commitments on currency matters. He also indicates the central bank has room for additional reserve ratio reductions but the scope for the size is smaller than “previous years.” He promises credit growth and support for “small firms.”
This resulted in all the major sectors finishing to the upside. Industrials, IT, consumer discretionary, telcos, materials, consumer staples and utilities each advanced by at least 1%. The comments by PBoC Gov. Yi boosted Chinese mid and small caps which is why Shenzhen led the region.
Other Important Headlines
- Nissan +1.1%, Mitsubishi +0.7% and Renault +2.5% are conducting talks regarding their strategic alliance. A press conference is schedule after the Tokyo Exchange close tomorrow.
- The Kyodo alleges Hitachi Ltd +5.6% is considering the sale of its Hitachi Chemical +20.0% stake. Hitachi Ltd. “declined” to comment specifically about the report while adding it weighs all options to increase value.
- Both Tencent +2.25% and Netease are among those receiving gaming approvals from Chinese authorities. A total of 95 games made the grade.
- Omron trading limit up 15.0% following the addition to the Nikkei 225 we flagged on Friday. Pioneer (flat) will be removed.
- Late on Friday, the Hong Kong Monetary Authority purchased HK$1.51b after the currency slipped below the weak end of its trading band.
Europe has been trading higher since the open. The markets pared their advance but bounced off the lows. Most sectors are green. Banks gain more c. 1% with basic resources and autos better by more than 0.5%. Defensives have lost some steam and lag the market.
Regarding Brexit, PM May faces yet another test with a vote in Parliament due tomorrow. Current projections indicate she will suffer another defeat as the deadline looms.
The commodities markets see crude trading higher. Saudi Arabia reportedly will supply less oil than requested in April. The IEA indicates the U.S. will continue to produce significant shale output and weaken OPEC’s influence for Texas Tea.
- Follow upon Friday’s speculation, Deutsche Bk +3.0% CEO Sewing reportedly is ceasing resistance to a merger with Commerzbank +5.2%.
- Concerns weigh upon Safran -2.2% due to its engine jv with Boeing following a second crash of a 737 Max airplane. More on this below.
On Our Side of the Pond
- Circling back to the tragic Boeing plane crash in Eithiopia, China has order all 737 Max planes to be grounded. The companies share are trading down sharply pre-market and weigh upon the DOW futures.
- Nvidia % is purchasing Mellanox Tech for $6.9b. The $125/sh cash bid represent a 14.0% premium to Friday’s close.
- Levi Strauss has set is IPO price range at $14 to $16.
- 60 Minutes aired an interview with Fed Chair Powell. He reiterates the central bank patience regarding rate hikes.
Markets and Macro
|CH||Aggregate Financing CNY||Feb||1300.0b||703.0b||4640.0b||4635.3b|
|CH||Money Supply M2 YoY||Feb||8.40%||8.00%||8.40%||—|
|CH||Money Supply M1 YoY||Feb||2.00%||2.00%||0.40%||—|
|CH||Money Supply M0 YoY||Feb||10.00%||-2.40%||17.20%||—|
|CH||New Yuan Loans CNY||Feb||950.0b||885.8b||3230.0b||—|
|JN||Money Stock M2 YoY||Feb||2.40%||2.40%||2.40%||2.30%|
|JN||Money Stock M3 YoY||Feb||2.10%||2.10%||2.10%||—|
|JN||Machine Tool Orders YoY||Feb P||—||-29.30%||-18.80%||—|
|GE||Industrial Production SA MoM||Jan||0.50%||-0.80%||-0.40%||0.80%|
|GE||Industrial Production WDA YoY||Jan||-3.30%||-3.30%||-3.90%||-2.70%|
|GE||Current Account Balance||Jan||18.0b||18.3b||21.0b||23.1b|
|GE||Exports SA MoM||Jan||-0.50%||0.00%||1.50%||—|
|GE||Imports SA MoM||Jan||-0.10%||1.50%||1.20%||0.70%|
|GE||Labor Costs SA QoQ||4Q||—||-0.10%||1.00%||—|
|GE||Labor Costs WDA YoY||4Q||—||2.00%||2.70%||2.60%|
|FR||Bank of France Ind. Sentiment||Feb||100||101||99||—|
|SP||Retail Sales YoY||Jan||—||1.70%||0.00%||0.10%|
|SP||Retail Sales SA YoY||Jan||1.00%||0.80%||0.80%||0.60%|
|US||Retail Sales Advance MoM||Jan||0.00%||—||-1.20%||—|
|US||Retail Sales Ex Auto MoM||Jan||0.30%||—||-1.80%||—|
|US||Retail Sales Ex Auto and Gas||Jan||0.60%||—||-1.40%||—|
|US||Retail Sales Control Group||Jan||0.60%||—||-1.70%||—|
|CA||Bloomberg Nanos Confidence||8-Mar||—||—||55||—|