CAPIS Unity Day Global Markets 10/03/2019
Markets Overview The risk off mode continued in the Asian markets with several core indices seeing losses of 2%. However, Hong Kong bucked the trend. With a little more than an hour to go in the trading session, headlines hit that authorities would use emergency powers to ban protesters from wearing face masks. The announcement…
The risk off mode continued in the Asian markets with several core indices seeing losses of 2%. However, Hong Kong bucked the trend. With a little more than an hour to go in the trading session, headlines hit that authorities would use emergency powers to ban protesters from wearing face masks. The announcement sparked the Hang Seng Index to rally, erasing the day’s losses which at that point were about 0.4%. The general feeling is this was less severe than anticipated. The mainland Chinese markets remain closed with S. Korea also observing a holiday.
The majority of sectors end the day to the downside. Materials are off c. 1% followed by healthcare, industrials and consumer discretionary. Utilities is the only sector managing a small advance while real estate was down small.
The European markets have at least halted the selling tide. They dipped on the open but then managed a small uptick. They have since waffled following various Markit Service and Composite PMI readings. Given the poor manufacturing readings last week, it should come as no surprise the German and EU Composite readings are low. The EU remains barely above 50 but Germany’s was further below 50 than expected. Germany is closed for trading to honor Unity Day. The U.K. results for both Services and the Composite are unexpectedly below 50. Another negative for the markets are comments from PM Johnson regarding Brexit. In his presentation to Parliament, he says a resolution is “some way off.” Ireland remains critical of his plans for the border with Northern Ireland.
Several sectors are receiving a boost despite new U.S. tariffs following yesterday’s WTO ruling permitting them on $7.5b of EU goods. Those benefiting with levies better than feared include distillers, luxury-leather good providers and Airbus +3.3%. Overall, sectors are evenly split. Energy and media are off slightly more than 0.6%. Food/bevies move higher more than 0.5% followed by tech.
Following the European macro data, the debt markets are seeing most EU core yields falling. In general, they are lower between 3 to 5 basis points.
- The Japanese weekly Shukan Bunshun reports Softbank -2.0% is mulling a bid for Line Corp. 5.4%. The story cites a banker close to the situation. It does not say if any formal approach has been make. Both companies have declined to comment.
- Same store domestic sales at Fast Retailing’s -3.9% Uniqlo unit are 4.2% lower y/y for the month of September.
- The over-allotment option for Budweiser Asia’s -0.3% IPO has been exercised.
- After the local close, Tokio Marine announces it is purchasing Pure Group for $3.1b. It is a privately held U.S. insurance company.
- Ted Baker -36.0% is falling sharply following a profit warning. The company’s H1 revenues are lower by 0.7% y/y. More importantly, it sees H2 results lower y/y if current trends persist.
- H&M +6.2% performs better in the retail space. Its Q3 PTP of SEK 5.01b is a 25.0% improvement y/y and a touch better than consensus. Gross & operating margins also are ahead of expectations.
- Imperial Brands +0.2% CEO Cooper will step down from her post “once a suitable successor” can be recruited. She has been at the helm of the company for 9 years.
On Our Side of the Pond
- After yesterday’s close, E*Trade announces it will join the zero commission club for equities, ETFs and options.
- Also after yesterday’s close, Tesla reports Q3 deliveries of 97,000 units. That is ahead of consensus and a record for the company. However, it is short of Elon Musk’s mark of 100k. The shares are trading lower pre-market.
- PepsiCo is trading better. The company says it will meet or exceed its organic revenue growth target of 4%.
- Constellation Brands Q2 comparable net sales are $2.34b which is inline with estimates. More figures hitting the tape as we go to publication.
- Costco out after the close.
- There is plenty of macro due including Initial Jobless Claims, Markit Service and Composite PMIs, Factory Orders and Durable Goods.
Markets & Macro
|AU||AiG Perf of Services Index||Sep||—||51.5||51.4||—|
|AU||CBA Australia PMI Services||Sep F||—||52.4||49.1||—|
|AU||CBA Australia PMI Composite||Sep F||—||52||51.9||—|
|JN||Japan Buying Foreign Bonds||27-Sep||—||¥869.2b||-¥164.0b||-¥164.8b|
|JN||Japan Buying Foreign Stocks||27-Sep||—||¥320.9b||-¥106.3b||—|
|JN||Foreign Buying Japan Bonds||27-Sep||—||¥400.4b||-¥3148.6b||—|
|JN||Foreign Buying Japan Stocks||27-Sep||—||-¥221.2b||-¥1177.8b||-¥1178.0b|
|JN||Jibun Bank Japan PMI Services||Sep F||—||52.8||52.8||—|
|JN||Jibun Bank Japan PMI Composite||Sep F||—||51.5||51.5||—|
|SP||Markit Spain Services PMI||Sep||53.9||53.3||54.3||—|
|SP||Markit Spain Composite PMI||Sep||52.1||51.7||52.6||—|
|IT||Markit Italy Services PMI||Sep||50.5||51.4||50.6||—|
|IT||Markit Italy Composite PMI||Sep||50||50.6||50.3||—|
|FR||Markit France Services PMI||Sep F||51.6||51.1||51.6||—|
|FR||Markit France Composite PMI||Sep F||51.3||50.8||51.3||—|
|GE||Markit Germany Services PMI||Sep F||52.5||51.4||52.5||—|
|GE||Markit/BME Germany Composite PMI||Sep F||49.1||48.5||49.1||—|
|EC||Markit Eurozone Services PMI||Sep F||52||51.6||52||—|
|EC||Markit Eurozone Composite PMI||Sep F||50.4||50.1||50.4||—|
|UK||Markit/CIPS UK Services PMI||Sep||50.3||49.5||50.6||—|
|UK||Markit/CIPS UK Composite PMI||Sep||50||49.3||50.2||—|
|UK||Official Reserves Changes||Sep||—||$475m||$1918m||—|
|EC||Retail Sales MoM||Aug||0.30%||0.30%||-0.60%||-0.50%|
|EC||Retail Sales YoY||Aug||2.00%||2.10%||2.20%||—|
|US||Challenger Job Cuts YoY||Sep||—||—||39.00%||—|
|US||Initial Jobless Claims||28-Sep||215k||—||213k||—|
|US||Bloomberg Consumer Comfort||29-Sep||—||—||61.7||—|
|US||Markit US Services PMI||Sep F||50.9||—||50.9||—|
|US||Markit US Composite PMI||Sep F||—||—||51||—|
|US||ISM Non-Manufacturing Index||Sep||55||—||56.4||—|
|US||Factory Orders Ex Trans||Aug||—||—||0.30%||—|
|US||Durable Goods Orders||Aug F||—||—||0.20%||—|
|US||Durables Ex Transportation||Aug F||—||—||0.50%||—|
|US||Cap Goods Orders Nondef Ex Air||Aug F||—||—||-0.20%||—|
|US||Cap Goods Ship Nondef Ex Air||Aug F||—||—||0.40%||—|