TGIF Global Markets 3/15/2018
Asian Markets Most of the region sees solid gains. The Chinese markets were boosted by Chinese Prem. Liu stating the VAT will be reduced on April 1st. There were also a number of positive Sino-U.S. trade negotiation comments from both parties despite any meeting between Pres. Trump and Pres. Xi being pushed back until April….
Most of the region sees solid gains. The Chinese markets were boosted by Chinese Prem. Liu stating the VAT will be reduced on April 1st. There were also a number of positive Sino-U.S. trade negotiation comments from both parties despite any meeting between Pres. Trump and Pres. Xi being pushed back until April. Rounding out the day’s positives, the People’s National Congress approved relaxation of foreign investment rules.
We would be remiss to not mention a terrible attack on Mosques in Christchurch, New Zealand. Our thoughts and prayers go out to all victims and families. This caused Australia and New Zealand to lag the region.
All major sectors saw advances. Consumer discretionary, industrials, IT and real estate improved by at least 1%.
The BoJ concluded its two day policy meeting with no change to rates or asset purchases. To recap, those are: short term rate unchanged at -0.1%, JGB purchases with an annual pace of about ¥80t and ETF purchases at about ¥6t. This was as expected. However, the central bank is lowering its economic outlook. At his press conference, Gov. Kuroda defended the 2% inflation target.
Other Important Headlines
- Chinese February m/m home price increases slowed just a touch below the prior reading. Y/y they rose faster than during January. FDI during the month had a nice increase. (All data in macro section.)
- Macau is extending the gaming licenses of MGM China +5.0% and SJM Holdings +2.1% until 2022. This will delay the need to submit new bids for gaming rights.
- AIA Group’s -0.3% FY18 New Business of 23% is a touch ahead of consensus. The company will pay both a dividend and special dividend. The shares saw some mild profit taking given a better than 20% increase this year.
- Toyota Motor +1.1% will increase U.S. investment by about 30% to almost $13b over a five year period to 2021. This is an attempt to avoid auto and parts tariffs.
- Coca-Cola Amatil +1.0% indicates it still has interest in Kirin Holdings’ +0.7% Lion Dairy and Drinks assets.
Europe had been up small for the first few hours of the session. The markets moved to highs on comments from German Government Spokesperson Siebert. Following yesterday’s U.K. vote for a potential Brexit delay, he stated the EU would at least “discuss, if requested.” This is a bit of a relief the matter would be considered.
All major sectors are trading to the upside. Telecoms, technology, autos, chemicals and construction are better by at least 1%. Defensives and media lag.
Today is quad witching along with a FTSE rebalance in S. Africa. So mind your eye on volumes.
Other Important Snippets
- Two hours into the session BMW +1.1% released its FY18 results. Revenues are a touch better at €97.48b, EBIT is €9.12b with margin of 7.2%. The dividend is light of consensus: €3.50 vs. €3.86. The company sees a slight increase to 2019 deliveries.
- Also in the auto sector, VW +0.6% lags following yesterday’s SEC lawsuit announcement.
- Due to a French tax fine, UBS -1.5% is taking a legal provision of $2.83b
On Our Side of the Pond
- Quite a few earnings to keep an eye on including Oracle, Broadcom, Adobe and Ulta.
- Initial findings among the Boeing 737 Max 8 aircraft in Ethiopia indicate the the plane was configured to dive.
- Canada will release Home Sales with U.S. Empire Manuf, Industrial Production and Michigan Sentiment due.
Have a wonderful weekend and beware the Ides of March!
Markets and Macro
|SK||Export Price Index MoM||Feb||—||0.20%||-1.00%||-1.20%|
|SK||Export Price Index YoY||Feb||—||-2.40%||-1.40%||-1.60%|
|SK||Import Price Index YoY||Feb||—||3.60%||2.50%||2.40%|
|SK||Import Price Index MoM||Feb||—||1.90%||0.10%||0.00%|
|CH||New Home Prices MoM||Feb||—||0.53%||0.61%||—|
|JN||BOJ Policy Balance Rate||15-Mar||-0.10%||-0.10%||-0.10%||—|
|JN||BOJ 10-Yr Yield Target||15-Mar||0.00%||0.00%||0.00%||—|
|CH||Foreign Direct Investment YoY CNY||Feb||—||6.60%||4.80%||—|
|GE||Wholesale Price Index YoY||Feb||—||1.60%||1.10%||—|
|GE||Wholesale Price Index MoM||Feb||—||0.30%||-0.70%||—|
|EC||EU27 New Car Registrations||Feb||—||-1.00%||-4.60%||—|
|IT||Industrial Sales WDA YoY||Jan||—||0.60%||-7.30%||-7.40%|
|IT||Industrial Sales MoM||Jan||—||3.10%||-3.50%||-3.60%|
|IT||Industrial Orders NSA YoY||Jan||—||-1.20%||-5.30%||-4.70%|
|IT||Industrial Orders MoM||Jan||—||1.80%||-1.80%||-1.40%|
|IT||General Government Debt||Jan||—||2358.0b||2316.7b||2326.6b|
|EC||CPI Core YoY||Feb F||1.00%||1.00%||1.00%||—|
|EC||CPI YoY||Feb F||1.50%||1.50%||1.50%||—|
|IT||CPI FOI Index Ex Tobacco||Feb||—||102.3||102.2||—|
|IT||CPI EU Harmonized YoY||Feb F||1.20%||1.10%||1.20%||—|
|CA||Manufacturing Sales MoM||Jan||0.40%||—||-1.30%||—|
|CA||Existing Home Sales MoM||Feb||-4.00%||—||3.60%||—|
|US||Industrial Production MoM||Feb||0.40%||—||-0.60%||—|
|US||Manufacturing (SIC) Production||Feb||0.10%||—||-0.90%||—|
|US||JOLTS Job Openings||Jan||7225||—||7335||—|
|CA||Bloomberg March Canada Economic Survey|
|US||U. of Mich. Sentiment||Mar P||95.6||—||93.8||—|
|US||U. of Mich. Current Conditions||Mar P||112||—||108.5||—|
|US||U. of Mich. Expectations||Mar P||88.1||—||84.4||—|
|US||U. of Mich. 1 Yr Inflation||Mar P||—||—||2.60%||—|
|US||U. of Mich. 5-10 Yr Inflation||Mar P||—||—||2.30%||—|
|US||Net Long-term TIC Flows||Jan||—||—||-$48.3b||—|
|US||Total Net TIC Flows||Jan||—||—||-$33.1b||—|