>>> What to look at today - 21st of March 2019

Most currencies advanced against the dollar after the Federal Reserve abandoned projections for a resumption in interest-rate hikes this year and signaled a swift end to its balance-sheet contraction. China’s yuan hit its strongest since July, while stocks were mixed.
Treasuries climbed after the Fed’s stance was more cautious than most had forecast, with 10-year yields dropping to 2.53 percent. Most Asian stocks climbed, though Japan is closed for a holiday. U.S. and European futures were little changed. New Zealand’s dollar rose as a pick-up in growth eased concern on the need for policy easing. Australia’s dollar gained after a drop in the unemployment rate.
US After Hours GES -13.5%, MU +4.3%, WSM +2% following earnings/guidance

Nikkei +0.20% Hang Seng -0.58% CSI +0.04% Shanghai +0.35% Shenzen +0.77%

Eur$ 1.1425 CNH 6.6834 CNY 6.6801 JPY 110.48 GBP 1.3220 CHF 0.9918 TRY 5.4383 WTI$ 60.12 -0.17^%

S&P -0.16% EuroStoxx -0.18% FTSE +0.05% Dax -0.26% SMI -0.37%

Macro :
- Fed Sees No 2019 Hike, Plans September End to Asset Drawdown
- EU Pushes U.K. to Brink of No-Deal Brexit as May Seeks Delay

Keep an eye on :
- AF FP : France’s APE Participates in Air France-KLM Convertible Sale
- ALV GY : Allianz CFO Says Looking to Diversify Into New Strategies: FT
- BAVA DC : Bavarian Nordic 2019 Revenue Forecast Beats Estimates
- BOY LN : Bodycote Fairly Valued Amid Macro Slowdown Exposure: Berenberg
- CARLB DC : Carlsberg Faces EU250 Million Fine in German Cartel Case: Finans
- DBK GY : Deutsche Bank Mandates External Co. to Probe Spvy BD Leaks: NDR
- ELIOR FP : Elior in Talks With PAI on Potential Sale of Catering Activities
_ EL FP : EssilorLuxottica Holder Delfin Sees Violation of Merger Accord, EssilorLuxottica’s Del Vecchio Links Fight to Promotions: Figaro
- GAMA LN : Gamma Offers Substantial Growth Potential, Buy Stock: Jefferies
- HEI GY : HeidelbergCement Sees Growth in 2019 as Profit Hurt by Weather
- HBH GY : Hornbach Group FY Prelim. Adjusted EBIT EU135M, Est. EU149.75M
- IBABA BB : Ion Beam Full Year Revenue Misses Lowest Estimate
- JEN GY : Jenoptik Full Year Dividend Per Share Matches Estimates
- SKB GY : Koenig & Bauer Full Year Ebit Meets Estimates
- LXS GY : Lanxess Automotive Concerns Now Reflected in Shares: Berenberg
- MERL LN : Merlin Ebit Growth in 2019 Unlikely, Shares Mispriced: Berenberg
- METN SW : Metall Zug Full Year Gross Sales 1.7% Above Estimates
- MBTN SW : Meyer Burger Full Year Sales Miss Lowest Estimate
- MONC IM : Moncler Director Juan Carlos Torres Carretero Resigns
- OPHR LN : Medco Global Boosts Ophir Offer Price to 57.5 Pence a Share
- PAT GY : Patrizia Immobilien Plans 8% Dividend Increase
- PRS SM : Prisa Sets Capital Increase Price at EU1.33/Share
- RB/ LN : Clorox Sues Reckitt Benckiser Over ‘Deceptive’ Lysol Ads
- RILBA DC : Ringkjøbing Landbobank to Buy Back Shares up to DKK190
- SCYR SM : Strabag, Sacyr Get Financing for Colombia $712m Road Project
- SIFG NA : SIF Full Year Adjusted Ebitda Misses Lowest Estimate
- SKAB SS : Skanska: Unlikely to Reach Construction Margin Target in 2019-20
- STAGR FP : Holder Ares Life Agrees to Buy Remaining Shares of Stallergenes
- TLG GY : TLG Immobilien Full Year FFO I Per Share Misses Estimates
- TTI GY : Tom Tailor Holding Sells Bonita Unit, Terms Are Confidential
- TMG SS : *MARKETING GROUP PLC: TERMINATES PACTS WITH MANGOLD
- UBSG SW : UBS Drops Financing of New Coal Plants in Sustainability Focus
- MF FP : Wendel FY Net Income Falls; Plans EU200m Share Buyback
- WDI GY : Wirecard COO Was Aware of Allegedly Fraudulent Transactions: FT
- ROSE SW : Zur Rose Group Aims to Double Sales by 2022

>>> Europ : Brokers & Upgrades - 21st of March

>>> Up
* Bouygues Upgraded to Outperform at MainFirst; PT 37 Euros
* EasyJet Upgraded to Neutral at MainFirst; PT 13 Pounds
* Fraport Upgraded to Hold at Santander
* Lanxess Upgraded to Hold at Berenberg

>>>> Down
* Bodycote Downgraded to Hold at Berenberg
* Compass Downgraded to Sell at Goldman; PT 16.50 Pounds
* IAG Downgraded to Neutral at MainFirst
* ING Groep Raised to Outperform at RBC; Price Target 14.50 Euros
* Sodexo Downgraded to Sell at Goldman; PT 89 Euros
* Lookers Downgraded to Neutral at JPMorgan; PT 98 Pence
* Lufthansa Downgraded to Underperform at MainFirst; PT 18 Euros
* Merlin Downgraded to Sell at Berenberg
* Munich Re Downgraded to Hold at Jefferies; PT 212 Euros
* SGS Downgraded to Sell at Goldman; PT 2,400 Francs
* Tryg Downgraded to Sell at SEB Equities; PT 175 Kroner

>>> Initiation
* Assura Rated New Neutral at JPMorgan; PT 60 Pence
* Autogrill Rated New Buy at Goldman; PT 11 Euros
* Capital & Counties Rated New Hold at Panmure Gordon
* Derwent London Rated New Hold at Panmure Gordon; PT 32.96 Pounds
* Elior Group Rated New Neutral at Goldman; PT 12.60 Euros
* Great Portland Rated New Hold at Panmure Gordon; PT 7.41 Pounds
* Helical Rated New Buy at Panmure Gordon; PT 3.85 Pounds
* Shaftesbury Rated New Hold at Panmure Gordon; PT 9.35 Pounds
* Somfy Rated New Buy at Kepler Cheuvreux; PT 92 Euros
* Tikehau Capital Rated New Buy at Oddo BHF; PT 33.40 Euros

>>> Asian Update

Asia Market Update: Asian government bond yields generally lower post Fed decision; Aussie 3-yr yield moves back above RBA cash rate after unemployment data, Kiwi rises after GDP data


General Trend:
- Asian equities trade mixed as traders assess Fed statements/forecasts
- IT shares out perform in early trading in China
- Geely reports FY results in line, China Mobile results mixed
- Nikkei 225 closed for holiday, Nikkei Futures decline amid Yen strength
- South Korean chipmakers rise after earnings from Micron
- Tencent expected to report Q4/FY18 earnings after close in Hong Kong
- Australian financials track post Fed declines in US banks
- Iron ore miners trade generally higher in Australia, Vale remains in focus
- Aussie unemployment rate hits ~8-year low, participation rate declined
- New Zealand Dollar (NZD) rises as q/q GDP in line, y/y GDP had slowest growth rate since 2015
- South Korea prelim March chip exports -25% y/y, exports to China -12.6% y/y
- Bank of England (BoE) rate decision expected later today
- Philippines, Taiwan and Indonesia central banks to also meet today
- North America Feb SEMI equipment industry billings due after US close on Thursday

***Headlines/Economic Data***
Australia/New Zealand
-ASX 200 opened -0.2%
- (AU) AUSTRALIA FEB EMPLOYMENT CHANGE: 4.6K V 15.0KE; UNEMPLOYMENT RATE: 4.9% V 5.0%E (lowest level since June 2011)
- (NZ) NEW ZEALAND Q4 GDP Q/Q: 0.6% V 0.6%E; Y/Y: 2.3% V 2.5%E (matches slowest growth since 2015)
- (AU) Australia Feb RBA Govt FX Transactions (A$): -517M v -546M prior
- (AU) Australia sells A$500M v A$500M indicated in June 2019 notes, avg yield 1.73%, bid to cover 4.42x
- (NZ) New Zealand sells NZ$200M v NZ$200M indicated in 2.75% 2037 bonds; avg yield 2.3779% v 2.6079% prior; bid to cover 2.5x v 2.9x prior
- (NZ) New Zealand to ban military style semi-automatic weapons and assault rifles; gun buyback to be in range of NZ$100M-200M; new law expected to take effect by April 11th

Japan
-Nikkei 225 closed for holiday
- (JP) Japan PM Abe plans to visit the US in April to meet with US President Trump - Japanese Press
- (JP) Japan Cabinet Office (Govt) Mar Monthly Economic Report: Cuts overall economic assessment citing recent weakness in exports and industrial production (1st cut in 3 years) (after the close yesterday)
- (JP) Bank of Japan (BOJ) Gov Kuroda: Central bank said to be on the dovish side; to continue it persistent large scale easing (after the close yesterday)
- (JP) Japan Fin Min Aso: No intention to retract comments on BoJ, no difference with PM Abe on BoJ's 2% price target (after the close yesterday)

Korea
-Kospi opened +0.3%
- (KR) Bank of Korea (BOK) Gov Lee: It's not time to lower rates; monetary policy is in accommodating trend; uncertainties related to US Fed's policies have eased to a large extent - Yonhap
- (KR) North Korea earth tremor thought to be natural not related to testing – Yonhap
- (KR) South Korea Mar 1-20 Exports y/y: -4.9% v -11.7% prior; Imports y/y: -3.4% v -17.3% prior
- (KR) South Korea to cut stock transaction tax by 0.05% in 2019

China/Hong Kong
-Hang Seng opened +0.2%; Shanghai Composite opened +0.1%
- (CN) China PBoC Open Market Operation (OMO): Skips OMO for second consecutive session; Net: CNY0B injection v CNY0B prior
- (CN) China PBoC sets yuan reference rate: 6.6580 v 6.7101 prior (strongest level since mid-July 2018)
- (CN) Banks in China have been told by regulator to disclose stability data every 6 months - Chinese Press
- (HK) Hong Kong Chief Exec Lam: Worried about property prices rising
- (HK) Hong Kong Monetary Authority Chief Exec Chan: HKMA will continue to maintain the stability of HK$ peg; still a gap between HK$ and USD interest rates, which triggers outflows of HKD and drive the currency weak
- (CN) China National Nuclear Corporation plans to build its first floating nuclear power plant within the year - Chinese press
- 941.HK Reports FY18 (CNY) Net 117.8B v 114.3B y/y, EBITDA 275.5B v 270.4B y/y; Rev 736.8B v 741B y/y; Will strive to achieve more than 2.0 billion connections, favourable growth in telecommunications services revenue and, on a comparable basis3 , stable-to-rising growth in profit in 2019
- 175.HK Reports FY18 (CNY) Net 12.6B v 10.6B y/y, Rev 106.6B v 92.8B y/y; Affirms FY19 targets

North America
- (US) FOMC LEAVES TARGET RANGE UNCHANGED BETWEEN 2.25-2.50%; SIGNALS NO HIKES THIS YEAR AND ONE RATE HIKE IN 2020
- (US) FED: Balance Sheet Normalization Plans: to slow reduction of holdings starting in May and conclude run off in Sept
- (US) Fed Chair Powell: US economy is strong and we intend to use our policy to keep it there - FOMC press
- MU Guides Q3 $0.85 +/-$0.10 v $1.38e, Adj Rev $4.8B +/-$0.2B v $5.55Be; DRAM bit shipments to grow sequentially, and grow at much higher rates in Q4; NAND bit shipments modest sequential decline, growth to resume in Q4 - earnings call
-(BR) BRAZIL CENTRAL BANK (BCB) LEAVES SELIC TARGET RATE UNCHANGED AT 6.50%; AS EXPECTED
- (US) White House Economic Adviser Hassett: Sees 2019 GDP at 3.0% - CNN

Europe
- (UK) PM May: UK will not leave EU on time on March 20th as previously expected; not ready to delay Brexit any further than June 30th
- (NL) Netherlands provincial election exit poll: Dutch ruling coalition to lose its Senate majority
- (DE) German Finance Ministry: Feb Tax Rev -1.6% y/y; YTD +0.2% y/y; German growth likely to remain subdued through H1; Brexit disputes dampening expectations



***Levels as of 1:20 ET***
- Nikkei 225, closed, ASX 200 flat, Hang Seng +0.2%; Shanghai Composite +0.7%; Kospi +0.4%
- Equity Futures: S&P500 +0.1%; Nasdaq100 +0.3%, Dax +0.5%; FTSE100 +0.3%
- EUR 1.1438-1.1412 ; JPY 110.74-110.40 ; AUD 0.7168-0.7113 ;NZD 0.6939-0.6863
- Gold +1.3% at $1,319/oz; Crude Oil flat at $60.25/brl; Copper +0.9% at $2.953/lb

>>> US After Hours Summary: GES -13.5%, MU +4.3%, WSM +2% following ea


After Hours Summary: GES -13.5%, MU +4.3%, WSM +2% following earnings/guidance

After Hours Gainers:

Companies trading higher in after hours in reaction to earnings/guidance: MU +4.3%, WSM +2%, WPM +1%,

Companies trading higher in after hours in reaction to news: CFMS +10.5% (after closing 21% higher on the day), PTE +4.3% (initiated with a Outperform and $26 tgt at Evercore ISI), STNE +2.7% (tgt raised to $47 from $35 at Morgan Stanley), WDC +2% (MU sympathy), MTG +0.7% (authorizes $200 mln additional share repurchase program)

After Hours Losers:

Companies trading lower in after hours in reaction to earnings/guidance: GES -13.5%, QADA -7.4% (light volume), UNIT -7.2% (also declared quarterly cash dividend yesterday of $0.05 per share, prior $0.60 per share), WEX -2% (light volume), KLXE -1.2% (acquired two oilfield services companies; raises 2019 guidance)

Companies trading lower in after hours in reaction to news: CBMG -6.5% (proposed follow-on offering of common stock), BA -0.7% (ongoing volatility; also reports out that the FBI joined criminal probe into 737 Max certification), ADBE -0.7% (ticking lower; EVP sold ~6K shares worth ~$1.5 mln), CHGG -0.6% (to offer $500.0 mln of convertible senior notes due 2025), LRCX -0.4% (attributed to MU CapEx guidance)

>>> US Close Dow -0.55% S&P -0.29% Nasdaq +0.07% Russell -0.76%

Closing Stock Market Summary

The S&P 500 declined as much as 0.7% on Wednesday, as an earnings warning from FedEx (FDX 175.07, -6.34, -3.5%) helped fuel economic growth concerns. The benchmark index then advanced as much as 0.4% after the Federal Reserve provided a series of updates coming out of its FOMC meeting that created an impression it has shifted even further to a dovish mindset. The knee-jerk buying interest cooled off, though, leaving the S&P 500 down 0.3% for the day.

The Dow Jones Industrial Average lost 0.6%, and the Russell 200 lost 0.8%. The Nasdaq Composite increased 0.1%, helped in part by gains from the mega-cap stocks.

The S&P 500 financial sector (-2.1%) was the day's outright laggard, dragged lower by a sharp drop in U.S. Treasury yields following the FOMC announcements. Conversely, the communication services (+1.2%) and energy (+0.9%) sectors outperformed. The energy space benefited from oil prices ($60.20/bbl, +$0.86, +1.4%) setting a new yearly high following some bullish inventory data.

The Fed left the target range for the fed funds rate unchanged at 2.25-2.50%; signaled that it does not expect any rate hikes now in 2019 versus two rate hikes at the time of the December 2018 meeting; and said it will begin tapering its balance sheet in May with an end date of Sept. 30.

Leaving the fed funds rate intact was widely expected. Projecting zero rate hikes in 2019 -- and only one in 2020 -- along with providing an end date for its balance sheet runoff was less expected. These actions made it clear that the market doesn't have to fear the Fed like it did in the fourth quarter.

U.S. Treasury yields and the U.S. Dollar Index (95.85, -0.43, -0.5%) dropped on the dovish mindset. The 2-yr yield fell six basis points to 2.40%, and the 10-yr yield fell eight basis points to 2.54%. The curve-flattening trade weighed heavily on the financial sector, as a compression in spreads caused concerns that net interest margins will be weak for lenders.

There is apt be burgeoning concerns, too, that the Fed's pivot to a more dovish mindset reflects a dim view of the global economic outlook that won't translate well for earnings growth.

On a related note, FedEx called attention to slowing international macroeconomic conditions and weaker global trade growth trends for its disappointing earnings results/guidance.  That news pressured the Dow Jones Transportation Average (-1.3%), which trailed the market throughout today's session.

Another factor that had the market under wraps ahead of the FOMC decision was a remark from President Trump, who said he is considering leaving tariffs on Chinese goods in place for a long period.

In economic data, the weekly MBA Mortgage Applications Index increased 1.6% following a 2.3% increase in the prior week.

Looking ahead, investors will receive the weekly Initial and Continuing Claims report, the Philadelphia Fed Index for March, and the Conference Board's Leading Economic Indicators Index for February on Thursday.

  • Nasdaq Composite +16.5% YTD
  • Russell 2000 +14.4% YTD
  • S&P 500 +12.7% YTD
  • Dow Jones Industrial Average +10.4% YTD