CAPIS Global Recap – 10/01/2019

Asian Headlines As noted yesterday China is celebrating their National Day holiday for the balance of the week with Hong Kong shut for trading today along with the mainland. Hong Kong will reopen tomorrow but watch for possible weakness with reports out that police there are using live ammunition with one protester said to be…

Asian Headlines

As noted yesterday China is celebrating their National Day holiday for the balance of the week with Hong Kong shut for trading today along with the mainland. Hong Kong will reopen tomorrow but watch for possible weakness with reports out that police there are using live ammunition with one protester said to be hit.   Markets that were open saw gains on the session apart from India post the move higher in the States Monday.  IT and Material names led in Japan with broad gains seen Down Under as Health Care and Industrials surged.

Tankan readings out of Japan were mixed with its Large Manufacturing Index at 5 for the 3Q, ahead of the flattish 1 expectation reading but light vs the previous 7 seen. It was noted this is now the 3rd consecutive decline.  The Large all-industry Capex reading was 6.6% vs 7.0% estimated and 7.4% prior.  Their Economic Minister addressed the increase in sales taxes that went into effect today (to 10% from 8%) as he noted measures have been put into place to offset the increase.  Also, the Ministry of Finance sold ¥2.1T in 10 JGB’s to yield -.158% with the bid-to-cover at its lowest level since 2016.

Down Under, the RBA lowered its cash rate by the expected 25bps to .75%.  They noted increasing signs of a turnaround in housing adding employment is strong with labor force participation at record highs. Despite that though they see low rates expected for an extended period.

Indices in India pared losses brought on by selling in financial names.   The last few days have seen losses with a credit crunch in focus on defaults and lending curbs in some of their shadow lenders. Firms like Yes Bank have fallen sharply with bad loans and larger haircuts leading to continued downgrades on like names.

  • Aluminum producer UACJ -5% said they will restructure their operations in a bid to boost profit by ¥10B.  Within that 2k employees will lose their jobs with capex pared by ¥67B over the next several years. The company postponed their FY forecast as well.
  • Samsung -.4% said they will shut its last phone production facility in China as higher labor costs coupled with weak demand have weighed. India and Vietnam are the beneficiaries of the move with smartphone production there to increase.

European Headlines

After a better start European indices have pared initial gains and mixed on the day.  Again, the mix of sectors up vs down is evenly split with Autos out front while Food and Personal goods pull back less than a percent.  Inflation for the region came inline for September with Markit Manufacturing for the EU inline at 45.7.  Germany continues to see contraction in manufacturing with the inline reading of 41.7 while the UK fared a bit better, up to 48.3 vs 47.4 previously.  France retained its lead, finishing just over 50.0.  While these readings were expected their release has led to earlier positive sentiment giving way.  Results from Switzerland and Sweden though were not expected with both showing further contraction with Sweden moving from expansion into contraction with its 46.3 result.

Also dragging on markets the WTO pared their FY19 trade growth for the world to 1.2%, down from 2.6% prior.  Additionally, FY20 was cut to 2.7% from 3.0% with trade conflicts in focus.  Bonds are to the downside today with oil up a percent.

  • Spanish telco Masmovil Ibercom is up 13% post upping its FY19,20,21 guidance.  The firm signed an agreement with Orange for all future 5G needs.
  • Ferguson’s +4% earnings report pleased investors with a divi increase helping. Soc Gen said cost controls are leading to solid margins.  Despite a broadly flat US market the company said its order books support modest growth.
  • UK food retailer Greggs -9% retained their FY view with growth moderating as expected. In anticipation of a difficult breakup with the EU they are stocking up on longer-lasting ingredients and altering some recipes to do without some perishable ingredients.
  • After CEO Thiam retained his position yesterday CS -1% is lower today.  CPP Boueehas took the blame for the botched investigation of their former wealth-mgmt head.

Event Survey Actual Prior Revised
SK 80) Business Survey Manufacturing Oct 73 72
SK 81) Business Survey Non-Manufacturing Oct 74 72
AU 82) AiG Perf of Mfg Index Sep 54.7 53.1
AU 83) CBA Australia PMI Mfg Sep F 50.3 49.4
SK 84) CPI MoM Sep 0.50% 0.40% 0.20%
SK 85) CPI YoY Sep -0.30% -0.40% 0.00%
SK 86) CPI Core YoY Sep 0.70% 0.60% 0.90%
AU 87) ANZ Roy Morgan Weekly Consumer Confidence Index 29-Sep 114.7 110.1
JN 88) Jobless Rate Aug 2.30% 2.20% 2.20%
JN 89) Job-To-Applicant Ratio Aug 1.59 1.59 1.59
JN 90) Tankan Large Mfg Index 3Q 1 5 7
JN 91) Tankan Large Non-Mfg Index 3Q 20 21 23
JN 92) Tankan Large Mfg Outlook 3Q 0 2 7
JN 93) Tankan Large Non-Mfg Outlook 3Q 16 15 17
JN 94) Tankan Large All Industry Capex 3Q 7.00% 6.60% 7.40%
JN 95) Tankan Small Mfg Index 3Q -6 -4 -1
JN 96) Tankan Small Non-Mfg Index 3Q 8 10 10
JN 97) Tankan Small Mfg Outlook 3Q -8 -9 -5
JN 98) Tankan Small Non-Mfg Outlook 3Q 1 1 3
SK 99) Trade Balance Sep $5000m $5973m $1723m $1653m
AU 100) CoreLogic House Px MoM Sep 1.10% 1.00%
SK 101) Exports YoY Sep -9.60% -11.70% -13.60% -13.80%
SK 102) Imports YoY Sep 0.80% -5.60% -4.20%
IR 103) AIB Ireland PMI Mfg Sep 48.7 48.6
SK 104) Markit South Korea PMI Mfg Sep 48 49
JN 105) Jibun Bank Japan PMI Mfg Sep F 48.9 48.9
AU 106) Building Approvals MoM Aug 2.00% -1.10% -9.70%
AU 107) Building Approvals YoY Aug -20.00% -21.50% -28.50% -28.20%
AU 108) RBA Cash Rate Target 1-Oct 0.75% 0.75% 1.00%
IT 109) Bank of Italy to Release 2Q Credit Conditions and Risk
SP 110) Current Account Balance Jul 3.2b 2.1b 3.8b
SP 111) Spain Budget Balance YtD Aug -14.94b -13.92b
IN 112) Markit India PMI Mfg Sep 51.4 51.4
JN 113) Vehicle Sales YoY Sep 12.80% 4.00%
UK 114) Nationwide House Px NSA YoY Sep 0.50% 0.20% 0.60%
UK 115) Nationwide House PX MoM Sep 0.10% -0.20% 0.00%
SW 116) Swedbank/Silf PMI Manufacturing Sep 52 46.3 52.4 51.8
SZ 117) Retail Sales Real YoY Aug -1.40% 1.40% 1.50%
AU 118) Commodity Index SDR YoY Sep 1.80% 6.20% 6.30%
AU 119) Commodity Index AUD Sep 120.6 124.9 125
NO 120) DNB/NIMA PMI Manufacturing Sep 53.5 50.4 53.8 53.9
NE 121) NEVI Netherlands Manufacturing PMI Sep 51 51.6 51.6
SP 122) Markit Spain Manufacturing PMI Sep 48.2 47.7 48.8
SZ 123) PMI Manufacturing Sep 46.7 44.6 47.2
IT 124) Markit Italy Manufacturing PMI Sep 48.1 47.8 48.7
FR 125) Markit France Manufacturing PMI Sep F 50.3 50.1 50.3
GE 126) Markit/BME Germany Manufacturing PMI Sep F 41.4 41.7 41.4
EC 127) Markit Eurozone Manufacturing PMI Sep F 45.6 45.7 45.6
GR 128) Markit Greece Manufacturing PMI Sep 53.6 54.9
UK 129) Markit UK PMI Manufacturing SA Sep 47 48.3 47.4
DE 130) Danish PMI Survey Sep 50.2 48.7 48.6
EC 131) CPI Core YoY Sep A 1.00% 1.00% 0.90%
EC 132) CPI Estimate YoY Sep 1.00% 0.90% 1.00%
IR 133) Unemployment Rate Sep 5.30% 5.20% 5.30%