Asian Markets

A mix across the region today.  Underscoring that point, even the markets in Greater China end the day with disparate performance.  Peripherals were generally higher.

While the markets were mixed, all the major sectors ended the day lower.  Consumer discretionary, telcos, consumer staples, real estate and healthcare all off more than 0.5%.

Important Headlines

• Mizuho -1.5% created weakness among the Japanese financials following the 86% cut to profit forecasts we flagged yesterday.
• Chip maker Renesas -14.6% (Limit Down) provided another blow to the Japanese market.  The Nikkei reported the company will halt production at several factories during May and August.  The implications reverberated across suppliers, peers and customers.  It it is another bit of negative news for the auto sector and suppliers which the company supplies with chips.
• Speaking of the auto sector, Geely Auto’s -7.7% Feb. auto sales skidded lower 24.0% y/y.  The sales decline along with margin worries are what weighed upon the name.  Chairman Li foresees the Chinese auto industry restructuring over the next 3-5 years.
• Credit Suisse downgraded the Macau gaming sector to neutral from positive.  The analyst must be a kindred spirit noting its “time to take some chips off the table.”
• McDonalds Japan (flat) grilled up a 3.3% y/y increase in sales during February.
• The WSJ indicates Nintendo -1.9% is asking partner game providers to keep gaming fees low.
• A number of items hit after the local close.  Sekisui House released FY results.  A placing is occurring in China Gas.  A Thai court ruled the party of exiled PM Thaksin and PM Candidate Princess Rajakanya should be dissolved.

European Markets

Europe has been weaker since the open and currently is near the lows.  The markets await the ECB’s rate decision due at 7:45 AM Eastern.  However, the focus will be upon expected cuts to forecasts including GDP and inflation.  The central bank is also expected to announce a new LTRO program.

Basic resources and autos have been leading the region to the downside all session.  They are  currently off by roughly 2%.  Travel/leisure, industrials and chemicals are lower c. 1%.  Defensives are providing support.  Utilities, telecoms and food/bevies improve by more than 0.5%.  Personal goods are also up but small.

Snippets from the Region

• JCDecaux’s -1.1% FY adj. EBIT is better than consensus: €340m vs. €332m expected.  The company sees Q1 adj. organic revenue growth of more than 5%.  Icing on the cake is a nice 3.6% increase to its dividend.
• Continental -1.7% moves lower despite maintaining FY19 targets.  Following recent profit warnings, FY19 EBIT fell 11.7% y/y.  The company does note the markets remain weak.  The company is raising its FY18 dividend to €4.75/shs vs. consensus of €4.49.
• Hugo Boss’s -2.3% results and outlook read well.  However, the shares have are up c. 30.0% this year and slowing growth are causing money to come off the table.

On Our Side of the Pond

• Reports allege Samsung Elec. +1.0% is considering a bid for NXP Semiconductors.  However, Samsung has responded and denies the story.  NXP is paring earlier gains but the pre-markets levels remain above yesterday’s close.
• Huawei is suing the U.S. arguing the law labeling the company as a security risk is unconstitutional.
• GE is mulling the sale of its 50% stake in the renewable resources JV with Enel +1.0%.
• Amazon closing “pop-stores.“
• Kroger and Canadian Natural Resources are due along with the U.S. jobless claims data.

Markets and Macro