Asia Market Update: Asian equity markets trade mixed, in line with Monday’s US session; Samsung warns on Q1
General Trend:
- Samsung warns on Q1, shares decline over 0.5%
- Japanese equity markets out perform supported by Marine/Transportation, Machinery, Real Estate and Electric Appliance companies; Softbank lags
- Nintendo rises over 5% amid speculation related to new Switch models
- Telecom services and Industrial companies decline in China
- Australian rare earth miner Lynas Corp receives bid from Wesfarmers
- McDonald’s to acquire AI company Dynamic Yield, no terms disclosed but said to be more than $300M deal
- FOMC member Rosengren comments on Fed balance sheet, Q1 growth
- UK Parliament votes to take control of Brexit, passing the Letwin Amendment
- Reserve Bank of New Zealand (RBNZ) due to hold policy meeting on Wed
- China bank earnings in focus: ICBC and China Construction Bank are expected to report on Thursday, Bank of China and Agbank results seen on Friday
***Headlines/Economic Data***
Australia/New Zealand
-ASX 200 opened slightly lower
- (AU) RBA Assistant Gov Ellis: Weak income growth is weighing on household consumption; still a bit off from unemployment level that would drive materially faster wages; will not move with other countries on rates - speaking at HIA March Industry Outlook Breakfast
- (NZ) New Zealand Feb Trade Balance (NZ$): +12M v -200Me; Exports: 4.82B v 4.7Be; Imports: 4.8B v 4.9Be; Trade Balance (12-month YTD): -6.6B v -6.7Be
- LYC.AU Wesfarmers make conditional non-binding offer at A$2.25/shr cash
- (AU) Australia sells A$150M v A$150M indicated in 0.75% Nov 2027 indexed bonds, avg yield 0.27%, bid to cover 3.7x
- (NZ) New Zealand Feb New Residential Mortgage Lending Y/Y: 2.8% v 9.6% prior
Japan
-Nikkei 225 opened +0.9%
-(JP) BOJ Harada: Biggest contribution of QQE has been the productivity rise - speaking at Daiwa Institute of Research conference (after the close yesterday)
- (JP) Bank of Japan (BOJ) Summary of Opinions for Mar 24 and 25 meeting: In order to maintain the highly accommodative financial conditions, it is essential to persistently continue with the current monetary easing policy while taking account of developments in economic activity and prices
- (JP) Japan Feb PPI Services Y/Y: 1.1% v 1.1%e
- (JP) Japan Fin Min Aso: CPI target is not a case of prices can go up at any cost, not saying price target should be withdrawn
- (JP) Japan MoF sells ¥399.2B v ¥400B indicated in 0.80% (prior 0.8%) 40-yr JGBs, highest accepted yield 0.6100% v 0.7400% prior, bid to cover: 3.50x v 3.79x prior
-(JP) Bank of Japan (BOJ) Feb Core CPI Y/Y: 0.4% v 0.5% prior
Korea
-Kospi opened +0.4%
- 005930.KR Guides Q1 to be lower than market expectations; decline in memory chip and display prices larger than expected
- (KR) South Korea Finance Ministry: Fiscal policy will help sustain growth; concerns are rising over growth potential
China/Hong Kong
-Hang Seng opened +0.5%; Shanghai Composite opened +0.5%
- (CN) China Premier Li: To use reform and opening up as a driving force to further stimulate market vitality to ensure the healthy development of the Chinese economy - speaking at China Development Forum 2019 yesterday
- (CN) China PBoC Open Market Operation (OMO): Skips for 5th consecutive session; Net drains CNY50B v CNY60B prior
- (CN) China PBoC sets yuan reference rate: 6.7042 v 6.7098 prior
- 000002.CN Reports FY18 (CNY) Net 33.8B v 34.3Be, Rev 297.7B v 328Be
- 1208.HK To declare force majeure on Las Bambas contracts; Production and transport to be progressively impacted starting later this week due to protesting activity
- (CN) China city of Shanghai will increase minimum wage by 2.5%, effective in April
- (CN) China CSRC (securities regulator) tightens rules for convertible bond subscriptions
- (CN) China State Owned Enterprises (SOEs) Jan-Feb profit growth said to be 'solid', the combined profits of SOEs were CNY452B (+10% y/y) and revenues were CNY8.7T (+6.3% y/y) - Xinhua
Other Asia
- (TH) Thailand Feb Manufacturing Production Index Y/Y: -1.6% v +0.4%e
-(SG) Singapore Feb Industrial Production M/M -4.1% v -2.6%e; Y/Y: 0.7% v -0.04%e
North America
- (US) Fed’s Rosengren (moderate, voter): Shortening duration of Fed holdings aids flexibility; it may be important for Fed to increase share of Treasury bills, lower duration of its balance sheet more quickly; personal opinion is negative rates not the best way to respond to next recession - speaking in Hong Kong
- CBS Expected to resume merger talks with Viacom - NY Post
Europe
- (UK) Parliament passes Amendment A (Letwin): approves to take control of parliamentary time to hold indicated votes on Brexit alternatives on March 27th
- (FR) France and China sign deals worth billions of euro yesterday on China President Xi's visit to France
***Levels as of 1:20 ET***
- Nikkei 225, +2.2%, ASX 200 +0.1%, Hang Seng +0.1%; Shanghai Composite -1%; Kospi +0.3%
- Equity Futures: S&P500 +0.3%; Nasdaq100 +0.3%, Dax +0.4%; FTSE100 +0.3%
- EUR 1.1323-1.1310; JPY 110.24-109.93 ; AUD 0.7129-0.7107 ;NZD 0.6925-0.6906
- Gold -0.3% at $1,324/oz; Crude Oil +0.7% at $59.24/brl; Copper -0.1% at $2.854/lb
After Hours Summary: BBT boosted by analyst upgrade, IQ / MYOK lower on offering newsAfter Hours Gainers:
Companies trading higher in after hours in reaction to news: INO +5% (initiated with Overweight at Cantor Fitzgerald), X +1.5% (following CNBC FastMoney mention), BBT +1.1% (light volume; upgraded to Buy from Hold at Deutsche Bank), CELG +0.6% (submitted a New Drug Application to the FDA for ozanimod for the treatment of adults with relapsing forms of multiple sclerosis)
After Hours Losers:
Companies trading lower in after hours in reaction to news: IQ -4.5% (proposes offering of $1.05 bln convertible senior notes due 2025), MYOK -3.6% (announces proposed public offering of $200.0 mln of shares of common stock), ALDX -3.4% (schedules call for Tuesday, March 26 at 8 a.m. EDT to provide top-line results from the Phase 3 ALLEVIATE trial of topical ocular reproxalap in patients with allergic conjunctivitis), UTHR -1.1% (light volume; Sandoz announced the US availability of Treprostinil Injection, the first fully substitutable AP rated generic version of Remodulin (treprostinil) Injection, sold by United Therapeutics Corporation)
Closing Stock Market SummaryThe S&P 500 decreased 0.1% on Monday in a session that showed little conviction from buyers or sellers. Lingering concerns about global economic growth tempered buying interest and contributed to a further decline in U.S. Treasury yields.
The Nasdaq Composite also lost 0.1%. The Dow Jones Industrial Average and the Russell 2000 outperformed with gains of 0.1% and 0.5%, respectively.
The S&P 500 information technology (-0.4%) and financial (-0.4%) sectors dragged the broader market lower. Conversely, the consumer discretionary (+0.6%) and industrial (+0.2%) sectors outperformed.
Growth concerns were reinforced by another discouraging economic report from Germany. Germany's ifo Business Climate Index for March showed a continued deterioration of the manufacturing sector, which was notable, given Germany's status as a key export center.
U.S. Treasury yields steadily declined throughout the day on dwindling growth expectations, driving yields lower across the curve. The 2-yr yield dropped seven basis points to 2.25%, and the 10-yr yield dropped four basis points to 2.42% after briefly touching 2.39% -- its lowest level since Dec. 2017. The U.S. Dollar Index lost 0.1% to 96.53.
Homebuilding stocks outperformed amid the continued drop in rates, providing strong support for the consumer discretionary sector. The SPDR S&P Homebuilders ETF (XHB 38.17, +0.49) advanced 1.3%. The Philadelphia Semiconductor Index (-1.3%), on the other hand, pulled back from recent gains, with many of its components weighing on the tech sector.
Apple (AAPL 188.74, -2.31, -1.2%) hosted a highly-anticipated service event, in which it introduced Apple TV Plus, Apple News Plus, Apple Arcade, and Apple Card. Apple did not mention a price for its TV video service. Apple News Plus, a magazine subscription service, will cost $9.99/month. Despite the event, shares of Apple underperformed throughout the day, losing 1.2%.
In M&A news, Thermo Fisher (TMO 268.80, +4.99, +1.9%) will expand its presence into the gene therapy field after announcing it will acquire Brammer Bio for approximately $1.7 billion in cash.
Investors did not receive any U.S. economic data.
Looking ahead, investors will receive several economic reports on Tuesday: Housing Start and Building Permits for February, the FHFA Housing Price Index for January, the S&P Case-Shiller Home Price Index for January, and the Conference Board's Consumer Confidence Index for March.
- Nasdaq Composite +15.1% YTD
- Russell 2000 +12.3% YTD
- S&P 500 +11.6% YTD
- Dow Jones Industrial Average +9.4% YTD