Stocks in Asia fluctuated after positive data on China’s economy raised doubts over the possibility of additional stimulus. The 10-year Treasury yield ticked higher and the dollar retreated.
Japanese shares eked out modest gains, while those in Hong Kong and Shanghai swung between gains and losses. Equities in Australia fell and were little changed in Korea. European futures signaled a muted open, while U.S. futures edged higher. China’s economic growth figures were above expectations, as was industrial production and retail sales data. The yield on China’s 10-year sovereign notes climbed to its highest level since November. Earlier, the Nasdaq 100 closed within 0.1 percent of an all-time high, while gains fizzled late in the session to leave the S&P 500 Index little changed.
US After Hours CSX +4%, UAL +3.4%, IBM -3%, NFLX -1.2% following earnings/guidance, SFS +20% on APO buyout news
Nikkei +0.28% Hnag Seng +0.10% CSI +0.09% Shanghai +0.33% Shenzen +0.88%
Eur$ 1.1310 CNH 6.6920 CNY 6.6939 JPY 111.96 GBP 1.3057 RUB 64.0612 CHF 1.0070 TRY 5.7692 WTI$ 64.53 +0.75%
S&P +0.10% EuroStoxx -0.09% FTSE -0.11% Dax -0.04% SMI -0.02%
Macro :
- China’s Strengthening Economy Bolsters Hand in Trump Trade Talks
- Europe’s Far Right May Soon Dominate European Union Parliament
- Mario Draghi’s Finally Giving Up the Hardest Job in the World
Keep an eye on :
- ABBN SW : ABB First Quarter Revenue Meets Estimates
- ASML NA : ASML 2Q Net Sales View Midpoint Matches Est; Confirms 2020 Goals
- CS FP : *AXA SA ADRS DIP AFTER FT REPORT IT MAY FACE NOTRE-DAME CLAIMS --> Fake News The insurer of Notre Dame is the French State
- ACA FP : Santander, Credit Agricole to Combine Custody, Servicing Ops
- BAR BB : Barco First Quarter Revenue 2.6% Above Estimates
- BMW GY : BMW to Recall 360,001 Cars in China on Takata Airbag Issue
- BNP FP : Barclays, BNP Said to Eye Goldman’s Playbook for Private Debt
- CBK GY : Commerzbank Rises as Report of ING Interest Adds Another Suitor
- CLNX SM : Cellnex Hires Goldman Sachs to Prepare Offer for TDF: Expansion
- DAI GY : Daimler Places Bet on Next-Generation Battery Startup
- BN FP : Danone Confirms 2019 Guidance as 1Q LFL Sales Growth Meets Est.
- DTE GY : T-Mobile, Sprint Shares Fall as WSJ Reports DOJ Deal Resistance
- DPW GY : Deutsche Post Expects to Sees ‘Decent’ Growth Rate This Year
- DDASA NO : Dolphin Weighs Scrapping Rig Amid Restructuring: Upstream
- DMP GY : Dermapharm Sees 2019 Sales Growth of 14%-19%
- ELISA FH : Elisa First Quarter Comparable Ebitda 1.3% Above Estimates
- ERICB SS : *ERICSSON 1Q NET SALES SEK48.9B, EST. SEK48.37B
- ERICB SS : Ericsson Reports Sales Boost From Carriers’ Nascent 5G Spending
- ERICB SS : Ericsson First Quarter Net Sales 1.1% Above Estimates
- FER SM : Ferrovial Mulls Option to Raise Stake in 407 ETR: Confidencial
- FNAC FP : Fnac Darty in Exclusive Talks to Buy Nature & Decouvertes
- GAM SW : GAM Expects Completion of ARBF liquidation by Mid-July 2019
- INTC US : Intel to Exit 5G Smartphone Modem Business, Skips 2020 Launches
- NOVN SW : Novartis Says Interim Data Reinforce Effectiveness of Zolgensma
- OR FP : L'Oreal First Quarter Like-for-like Sales Beat Estimates
- OR FP : L’Oreal’s Asian Sales Overtook Europe for First Time, L’Oreal Analysts See ‘Fantastic’ Quarter, No Signs of Slowdown
- SHBA SS : Handelsbanken Won’t Make 2018 Profit-Sharing Scheme Provision
- PWTN SW : Panalpina 1Q Ebit, Ebitda Broadly in Line With Estimates
- PUB FP : Publicis May Be Cut by S&P on Epsilon Purchase
- RI FP : Pernod Ricard to Buy ‘Super-Premium’ Italian Gin Brand Malfy
- ROG SW : Roche Ups 2019 Sales Growth Guidance; 1Q Revenue Beats (1)
- STAGR FP : Stallergenes Greer Confirms FY Outlook for 2019
- SRAIL SE : Stadler Rail Says Fully Exercised IPO Over-Allotment Option
- SUN SW : Sulzer 1Q Orders Rise to CHF984.1m, Confirms Outlook for FY 2019
- TEMN SW : Temenos First Quarter Non-IFRS EPS Beats Highest Estimate
- TOM2 NA : TomTom Maintains Full Year Gross Margin Above 70%
- UCG IM : UniCredit Lawyer Enters Guilty Plea for Bank in Sanctions Case
- VIE FP : Veolia Is Said to Seek Over $1 Billion in District Energy Sale
- DG FP : Vinci Says No Negotiations With France on Airport Compensation
- VPK NA : Vopak First-Quarter Adjusted Ebitda Rises to EU214.6 Million
- YIT FH : YIT Signs Pre-Agreements for Construction Projects Worth ~EU160m
TICKER ALERT: WRAPX
After Hours Summary: CSX +4%, UAL +3.4%, IBM -3%, NFLX -1.2% following earnings/guidance, SFS +20% on APO buyout newsAfter Hours Gainers:
Companies trading higher in after hours in reaction to earnings/guidance: CSX +4.1%, UAL +3.4%
Companies trading higher in after hours in reaction to news: SFS +19.7% (to be acquired by funds managed by affiliates of Apollo Global Management), JMIA +8.7% (recent IPO momentum continues), TUFN +8.2% (continued volatility in recent IPO name), ADVM +6.7% (Adverum Biotech to present new preclinical non-human primate data that add to the growing body of evidence demonstrating ADVM-022 gene therapy's long-term durability and safety), QCOM +5.5% (continued strength following AAPL / QCOM news; also upgraded to Buy from Hold at Stifel), SELB +5.2% (to present new preclinical data from its gene and cell therapy program), ORGO +4.4% (initiated with Outperform at Oppenheimer), TDOC +1.8% (initiated with Overweight rating and $75 tgt at Stephens), ERIC +1.2% (ahead of earnings tomorrow before the open)
Rail names are moving higher on light volume following CSX earnings results: NSC +1.4%, KSU +1%, UNP +0.6%, CNI +0.4%
Airlines lifting along with UAL following earnings/guidance: AAL +1.2%, LUV +1.2%, ALK +0.5%After Hours Losers:
Companies trading lower in after hours in reaction to earnings/guidance: IBM -2.9%, NFLX -1.2%
Companies trading lower in after hours in reaction to news: S -7% / TMUS -4% (T-Mobile US and Sprint trade lower on WSJ report suggesting unlikely DOJ merger approval), NTRA -6.7% (files for $100 mln common stock shelf offering), ARNC -1.9% (attributed to block trade pricing), VZ -0.9% (carrier indicated lower after WSJ reported that the DOJ may not approve TMUS / S merger), FNKO -0.6% (light volume; announces that CFO Russell Nickel will step down by the end of 2019), APHA -0.5% (proposes private offering of US$300 mln convertible senior notes due 2024)
>>> Up
* Ackermans Upgraded to Buy at Kepler Cheuvreux; PT 160 Euros
* BIC Upgraded to Neutral at MainFirst; Price Target 76 Euros
* Brenntag Upgraded to Buy at Berenberg
* D'Ieteren Upgraded to Buy at Kepler Cheuvreux; PT 50 Euros
* EDP Renovaveis Upgraded to Buy at SocGen; PT 10 Euros
* Intertrust Upgraded to Overweight at JPMorgan; PT 19 Euros
* Qualcomm Upgraded to Overweight at JPMorgan; PT $88
* Sampo Upgraded to Overweight at JPMorgan; PT 48 Euros
* Tele Columbus Upgraded to Overweight at Barclays; PT 2.70 Euros
>>> Down
* Caverion Downgraded to Reduce at Inderes; PT 6.10 Euros
* GTT Downgraded to Hold at SocGen; Price Target 95 Euros
* IMCD Downgraded to Hold at Berenberg
* Nixu Downgraded to Reduce at Inderes; PT 12 Euros
* Rio Tinto Downgraded to Hold at Investec; PT 48.01 Pounds
* Univar Downgraded to Hold at Berenberg
* Valmet Downgraded to Sell at Berenberg
>>> Initiation
* AJ Bell Rated New Neutral at Macquarie; PT 3.45 Pounds
* Alcon Rated New Buy at Goldman; PT 65 Francs
* Altice Europe Resumed at Citi With Neutral
* Burberry Rated New Underperform at Bernstein; PT 17.25 Pounds
* EssilorLuxottica Rated New Outperform at Bernstein; PT 120 Euros
* Richemont Rated New Outperform at Bernstein; PT 88 Francs
* Saint-Gobain Rated New Neutral at Citi; PT 38 Euros
* SSE Resumed at Morgan Stanley With Equal-weight
* Suez Reinstated at Barclays With Equal-weight; PT 12.50 Euros
* Veolia Reinstated at Barclays With Overweight; PT 23.50 Euros
>>> Call
* Opportunities in Chemicals Distribution, Buy Brenntag: Berenberg
US and China tech giants look increasingly similar
There is an inconvenient likeness between the main protagonists in both countries
US tech giants have been carrying out some nifty remodelling in recent months.
Apple is ramping up its activities in films, payments and gaming to reduce its dependence on iPhones — much like Xiaomi, the Chinese group that started out making cheap smartphones and branched into internet services including entertainment and finance.
Google has been spending heavily on content, data centres and equipment, blowing $25.1bn last year. It is also, via the cloud, making a big bet on gaming — recalling China’s gaming and investment tech conglomerate Tencent.
Facebook’s move to integrate its messaging app WhatsApp and social media Instagram also carries more than a whiff of the Shenzhen-based tech giant’s modus operandi.
It would be too much to suggest that US tech is taking a chapter or two from China’s playbook. But there is an increasingly inconvenient similarity between the main protagonists in the US and China.
This has two sets of repercussions, one local and one global. Locally, it means that in south-east Asia and India — the part of the globe where US and Chinese players compete on a broadly even footing — they will be doing so with more comparable offerings than was previously the case.
Take India, where Tencent will battle with Google, WhatsApp and Xiaomi on payments.
Globally, the backlash against big tech would appear to be calling time on the conglomerate model. Baidu, Alibaba and Tencent, the BAT trinity, began — respectively — in search, ecommerce and social media.
But Alibaba and Tencent in particular added ever more activities in a bid to keep users captive within their ecosystems for ever bigger chunks of the day: shopping, watching sports and films, listening to music or reading literature — and an app to pay for it all too.
The duo now command such huge swaths of the economy and are so inextricably stitched into the fabric of people’s lives that Beijing is chafing at their power and influence in the same way that Washington frets about the might of Silicon Valley.
Some financiers and start-ups believe some parts of the government are even pushing for a break-up of the duo; the government, they say, is particularly leery of a repeat of the shadow banking crisis, and would like to see finance operations carved out.
Evidence of this thinking is afforded by the long delay — 14 months and counting — in approving Alibaba’s proposal to swap its profit-sharing arrangement with Ant Financial, its payment affiliate, for a 33 per cent equity stake. “If [Beijing] don’t like what you are doing, it just drags and drags,” says one tech banker.
Another longtime China investor also sees the delay as deliberate. “The government likes two different companies, even though they have overlapping shareholders.
The US has different beef — lack of competition, political bias and disregard for data privacy — but for some the answer is the same. Democratic senator Elizabeth Warren, for example, has promised a break-up should she be elected president in 2020.
But perhaps the more pressing copycat question for investors right now is whether US start-ups will follow their Chinese peers’ path — or should that be cliff? — as they head to the public markets.
Uber, Pinterest, Airbnb and Palantir follow in the steps of, among others, Xiaomi, Meituan Dianping, China Literature and Tencent Music Entertainment.
There is more than a whiff of similarity between some of these and some of the upcoming US listings: cash burn, aggressive competition, unclear paths to profitability and acres of risk factors.
Most of the Chinese IPO class of 2018 ended the year below their issue price, but the pain did not stop there. Several launched follow-on offerings before the ink was barely dry on the first one, including ecommerce group Pinduoduo, which tapped the markets six months later, and esports streamer Huya.
The US has had endless spats over Chinese copying. Investors could find it is every bit as irksome when imitation goes in the opposite direction.