Asian stocks were mixed, while U.S. stock futures pared declines as investors anticipated China’s response to the Trump administration’s latest barrage of tariffs. The dollar and the Chinese yuan were stabilized.
Japan’s equity benchmarks outperformed, with the Topix index on course for its best day since March, while Chinese stocks consolidated around four-year lows and Hong Kong shares dropped for a second day. The largest exchange-traded fund that tracks the S&P 500 Index retreated after hours following President Donald Trump’s announcement that a fresh $200 billion in Chinese goods are subject to levies of 10 percent, rising to 25 percent in 2019.
US After Hours ORCL -3.7%, FDX -2.4% following earnings/guidance, NXEO +15% / UNVR +1.6% on M&A news
Nikkei +1.41% Hang Seng +0.02% CSI +1.435 Shanghai +1.28% Shenzen +1.19%
Eur$1.1712 CNH 6.8639 CNY 6.8605 JPY 112.24 GBP 1.3164 CHF 0.9615 TRY 6.3640 RUB 67.9014 WTI$ 68.69 -0.30%
S&P +0.11% EuroStoxx -0.06% FTSE -0.24% Dax -0.17% SMI -0.07%
Macro :
- EU is Said to Prepare Emergency Laws in Case of Hard Brexit: HB
- U.S. Tariffs Credit Negative for Chinese Companies: Moody’s
Keep an eye on :
- ABG SM : Abengoa Is Said to Seek EU5B Debt Refinancing: Confidencial
- AGFB BB : Agfa suitor Kanteron Systems studies multiple options after approach rebuffed
- AF FP : Buy Long Haul-Exposed IAG, Air France, Sell EasyJet: Berenberg
- ALV GY : Allianz is Said to Be One of Top Sponsors of Olympic Games: HB
- MT NA : ArcelorMittal Is Said to Eye Buying Essar’s EPC Business: ET
- AZN LN : AstraZeneca-Backed ADC Therapeutics Is Said to Weigh IPO, Sale
- ATEB BB : Atenor to Sell NAOS Office Development in Luxembourg; No Terms
- NSU GY : Audi Plans a Dozen Electric Vehicles to Take on Tesla’s Lineup
- BBA LN : BBA Aviation Buys Aerospace Aftermarket Firm Firstmark For $97m
- CLN SW : Clariant Sets New Targets, Names New CEO Amid Strategic Review
- COV FP : Covivio Set to Deliver Sector-Beating Returns: Morgan Stanley
- CVAL IM : Creval Investor Dumont Proposes Lovaglio as Next Chairman
- DANSKE DC : EU’s Katainen Says Laundering Raises Risks of New Crisis: Borsen
- DBHN GY : Deutsche Bahn Invests 3-Dgt Mln Amount in Amsterdam Trains: FAZ
- GNRO FP : GeNeuro Regains Worldwide Rights to MS Therapy From Servier
- HSBA LN : HSBC Plans Wealth Hiring Spree in CEO’s Bet on Asia Millionaires
- IMPN SW : Implenia Wins CHF80m Order to Build New Bus Terminal in Sweden
- IPS FP : Ipsos-GfK Deal Reports Successful Merger Clearance
- ITX SM : Inditex Short Positions Hit Record High After 1H Earnings
- KORI FP : Korian Launches Tap Issue of Odirnane of About EU60M
- MAN GY : VW’s MAN: Holders Can Tender for EU90.29 + EU5.47/Shr by Oct. 8
- MB IM : Mediobanca Is Said in Talks on Stake in Messier Maris: Echos
- MOR GY : Morphosys, Leo Pharma Expand Deal Peptide-Derived Therapeutics
- NESN SW : *NESTLÉ TO SELL GERBER LIFE TO WESTERN & SOUTHERN FOR $1.55B
- OCDO LN : Ocado Third Quarter Gross Sales Retail GBP348.6 Mln
- PURE LN : PureCircle in Patent Complaint Against SweeGen; FY Sales Up 10%
- RNO FP : Renault-Nissan-Mitsubishi Partners Google for Media Display: WSJ
- SAF FP : Safran’s Vetting for COL/UTX Castoffs Seen Done in Weeks: Reorg
- SAN SM : Santander Is Said in Early Talks to Buy Peel Hunt: Sky
- SAP GY : Watch SAP Shares After Oracle Sinks on Cloud Struggles
- TSCO LN : Tesco Recent Pullback a Surprise, Opportunity to Buy: Jefferies
- VER SM : Vertice 360 OKs Binding Accord to Integrate DMD Media: Filing
- VOW3 GY : VW Board to Discuss Stadler’s Future on Sept. 28: Handelsblatt
- ZAL GY : Zalando Now Sees Revised Adjusted Ebit of EU150-190M for FY18
>>> Up
* BillerudKorsnas Upgraded to Buy at SEB Equities; PT 120 Kronor
* Casino Upgraded to Add at AlphaValue
* Centrica Upgraded to Buy at Goldman; PT 1.76 Pounds
* Fresnillo Upgraded to Top Pick at RBC; PT 13 Pounds
* Merlin Upgraded to Buy at SocGen; Price Target 13.70 Euros
* Polymetal Upgraded to Outperform at RBC; PT 8 Pounds
>>> Down
* CYBG Downgraded to Hold at Berenberg
* NCC Downgraded to Hold at SEB Equities; Price Target 169 Kronor
>>> Initiation
* Air France-KLM Rated New Buy at Berenberg; PT 10.50 Euros
* Argenx Rated New Buy at Stifel; PT 139 Euros
* BAT Reinstated Equal-weight at Morgan Stanley; PT 39.20 Pounds
* Borr Drilling Rated New Buy at BTIG
* Covivio Resumed at Morgan Stanley With Overweight; PT 101 Euros
* EasyJet Rated New Sell at Berenberg; PT 13.10 Pounds
* FLEX LNG Rated New Buy at Seaport; PT 20 Kroner
* FNG Rated New Buy at ING; PT 30 Euros
* IAG Rated New Buy at Berenberg; PT 8.15 Pounds
* Imperial Brands Reinstated Underweight at Morgan Stanley
* Lufthansa Rated New Hold at Berenberg; PT 24 Euros
* RDI REIT Rated New Buy at Berenberg; PT 40 Pence
* Ryanair Rated New Hold at Berenberg; PT 13.50 Euros
* Swedish Match Reinstated Overweight at Morgan Stanley
* Wizz Air Rated New Buy at Berenberg; PT 40 Pounds
* Zalando Rated New Underperform at MainFirst; PT 40 Euros
>>> Call
* *CEWE, DEUTSCHE TELEKOM ADDED TO BANKHAUS LAMPE ALPHA LIST
asian Market Update: US confirms planned tariffs on $200B in China goods, along with product exemptions; Markets await possible countermeasures from China amid monetary easing speculation
Tue, 18 Sep 2018 1:32 AM EST
General Trend:
-Hang Seng underperforms
-Nikkei 225 outperforms amid Monday’s holiday and focus on trade talks
-Japanese steelmakers outperform on hopes regarding US/Japan trade talks
-NY Copper declines over 2%, later pares loss
- (CN) China likely will not send trade delegation to Washington following US announcement on new round of tariffs (HK Press)
- China Securities Regulator official plays down stock market declines
-China HNA Group announces executive changes
***Headlines/Economic Data***
Australia/New Zealand
-ASX 200 opened -0.2%
-(AU) Reserve Bank of Australia (RBA) Sept Meeting Minutes: Reiterates next move in cash rate more likely to be an increase, sees no strong case for near-term adjustment in policy
-(AU) Australia Q2 House Price Index Q/Q: -0.7% v -0.7%e; Y/Y: -0.6% v -0.7%e
-(AU) Australia Debt Agency (AOFM): Priced A$3.75B in Feb 21 2050 Indexed Bonds through syndication, yield 1.16%
-(NZ) New Zealand Aug Non Resident Bond Holdings: 58.2% v 58.7% prior
China/Hong Kong
-Shanghai Composite opened -0.3%, Hang Seng -0.3%
-(CN) USTR publishes tariffs list related to $200B in China goods
-(CN) China Commerce Minister: China has confidence and ability to achieve 2018 targets; Cooperation between the US and China is the only correct choice on trade
-(CN) China Vice Premier said to convene tariff response meeting
-(CN) China Securities Market (CSRC) Official Fang: China has ample fiscal and monetary policy tools to cope with the impact from trade frictions with the US; China preparing for worst scenario on trade issue, sees tariffs negative impact on China GDP of about 0.7 ppt
-(CN) PBoC Advisor Liu: trade war has relatively big impact on expectations; trade war's impact on domestic economy not 'very big', but should watch impact on equity and currency markets
-(CN) According to analysts, China PBoC may announce targeted RRR cut around Oct - China Securities Journal
-(CN) China may announce additional measures to stabilize investment - Chinese Press
-(CN) China PBoC Open Market Operation (OMO): Injects CNY200B in 7 and 14-day reverse repos v skipped prior: Net: CNY200B injection
-(CN) China PBoC set yuan reference rate: 6.8554 v 6.8509 prior
-(HK) Hong Kong Finance Sec Chan: Reiterates Hong Kong dollar (HKD) currency peg is 'very strong'
Japan
-Nikkei 225 opened -0.2%
-(JP) Japan Fin Min Aso: Reiterates specific monetary policy up to BoJ to decide; Understands BoJ Gov Kuroda's view that premature debate on exit strategy will cause market confusion
-(JP) Japan to offer measures to reduce trade surplus with US in upcoming talks in order to avoid tariffs on autos, which is expected to hit Japan the hardest if implemented - Nikkei
-(JP) Japan Economy Min Montegi: No country wants 'tit-for-tat' tariff retaliation; Japan and the US are making final adjustments on the date for bilateral trade meeting, will likely make an announcement 'shortly'
Korea
-Kospi opened -0.7%
- (KR) South Korea President Moon trip to N. Korea today to focus on peace and a new economic relationship on the basis of denuclearization - Korean press
North America
-US equity markets ended lower: Dow -0.4%, S&P500 -0.6%, Nasdaq -1.4%, Russell 2000 -1.1%
-(CA) Canada PM Trudeau: Moving 'close to a decision point on NAFTA', might be days or weeks away
Europe
- (UK) UK Brexit Minister Raab expects the EU to make concessions - German Press
- (UK) UK Prime Min May: under a no-deal Brexit, there would be disruptions but UK has to make a success of a potential no-deal Brexit - BBC interview
- (EU) EU Commissioner Dombrovskis: Trade conflict is raising downside risks to the economy
***Levels as of 01:30ET***
- Nikkei 225, +1.5%, ASX 200 -0.4%, Hang Seng -0.8%; Shanghai Composite +0.2%; Kospi +0.3%
- Equity Futures: S&P500 -0.1%; Nasdaq100 -0.2%, Dax -0.1%; FTSE100 flat
- EUR 1.1703-1.1666 ; JPY 112.04-111.66 ; AUD 0.7211-0.7143 ;NZD 0.6603-0.6561
- Dec Gold -0.3% at $1,202/oz; Oct Crude Oil -0.5% at $68.33/brl; Dec Copper flat at $2.648 /lb
After Hours Summary: ORCL -3.7%, FDX -2.4% following earnings/guidance, NXEO +15% / UNVR +1.6% on M&A newsAfter Hours Gainers:
Companies trading higher in after hours in reaction to news: AVP +20.7% (Avon Products has attracted M&A interest from Natura Cosmeticos, according to WSJ), NXEO +14.9% and UNVR +1.6% (Univar to acquire Nexeo in cash and stock transaction valued at approx $2.0 bln or $11.65 per share), UNP +3.4% (to launch Unified Plan 2020 Oct 1 -- will be rolled out in phases across the entire Union Pacific rail network), IMGN +3.3% and CLVS +0.6% (initiated with Buy at Guggenheim), WMT +0.2% (initiated with Outperform at BMO Capital Markets)
After Hours Losers:
Companies trading lower in after hours in reaction to earnings/guidance: ORCL -3.7%, FDX -2.4%
Companies trading lower in after hours in reaction to news: PSDO -6.8% (announces underwritten secondary offering of 3.0 mln shares of common stock by selling shareholders), EROS -4.8% (files for 3,111,088 A ordinary share offering by selling shareholders), ARGX -3% (launches $300 mln proposed public offering in the United States), SONO -1.3% (lower on reports that Amazon plans to release at least eight new devices powered by Alexa), CFFN -1.1% (files for approx 2.96 mln share common stock shelf offering by selling securityholders)
Closing Market Summary: Pending Tariff Announcement Pushes Stocks LowerWall Street fell on Monday, with tech shares leading the retreat, as investors prepared for another tranche of U.S. tariffs on Chinese goods. The S&P 500 declined 0.6%, breaking a five-session winning streak, and the Dow lost 0.4%. The Nasdaq and the Russell 2000 underperformed, losing 1.4% and 1.1%, respectively.
This latest round of tariffs is expected to slap a duty of around 10% on $200 billion worth of Chinese goods. Beijing has responded by saying it may decline a U.S. offer to resume trade talks if the duties are implemented, adding it's not going to negotiate with "a gun pointed to its head." That news had equity futures down in pre-market trading.
The S&P 500 and the Dow held modest losses for much of the session, but those losses were extended in the afternoon when President Trump said an announcement on U.S.-China trade will be coming after the closing bell. The tech-heavy Nasdaq also hit news lows on the president's comment, but was notably weak even before as FAANG names lagged -- Amazon (AMZN 1908.03, -62.16) lost 3.2%; Apple (AAPL 217.88, -5.96) lost 2.7%; Netflix (NFLX 350.35, -14.21) declined by 3.9%; and Facebook (FB 160.58, -1.74) and Alphabet (GOOG 1156.05, -16.48) lost 1.1% and 1.4%, respectively.
The consumer discretionary sector, which houses Amazon, and the top-weighted technology sector, which houses the other FAANG names, finished at the bottom of the sector standings, losing roughly 1.3% apiece. Financials (-0.4%) and health care (-0.3%) also finished in the red, but the seven remaining groups finished in the green. Gains were limited though, with no group adding more than 0.5%.
Overseas, stock markets in Asia opened the week on a lower note, weighed down by the threat of new tariffs, with China's Shanghai composite losing 1.1% and Hong Kong's Hang Seng tumbling 1.3%. European equity markets also slid, but losses were more modest, with Germany's trade-heavy DAX shedding 0.2%.
U.S. Treasuries were under pressure early, pushing the yield on the benchmark 10-yr note as high as 3.02% -- its highest level in four months. However, buyers emerged later in the session, leaving the 10-yr yield higher by just one basis point at 3.00%. Meanwhile, the U.S. Dollar Index dropped 0.5% to 94.07.
Reviewing Monday's economic data, which was limited to the September Empire State Manufacturing Index:
- The Empire Manufacturing Survey for September declined to 19.0 (consensus 23.0) from the prior month's unrevised reading of 25.6.
Looking ahead, the NAHB Housing Market Index for September and Net Long-Term TIC Flows for July will be released on Tuesday.
- Nasdaq Composite +14.4% YTD
- Russell 2000 +10.9% YTD
- S&P 500 +8.1% YTD
- Dow Jones Industrial Average +5.4% YTD
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Oracle beats by $0.03, reports revs in-line; increases buyback by $12 billion
- Reports Q1 (Aug) adj. earnings of $0.71 per share, $0.03 better than the S&P Capital IQ Consensus of $0.68; revenues rose 0.8% year/year to $9.2 bln vs the $9.26 bln S&P Capital IQ Consensus.
- Total Cloud Services and License Support plus Cloud License and On-Premise License revenues were up 2% to $7.5 billion. Cloud Services and License Support revenues were $6.6 billion, while Cloud License and On-Premise License revenues were $867 million.
- Operating Cash Flow was up 5% to $15.5 billion during the trailing twelve months.
- "We are off to an excellent start with Q1 non-GAAP earnings per share growing 19% in constant currency," said Oracle CEO, Safra Catz. "That strong earnings per share growth rate increases my confidence that we will deliver on another fiscal year of double-digit non-GAAP earnings per share growth."
- "In the first quarter, we increased our market share as customers continued to buy Oracle Fusion ERP to replace their existing SAP and Workday ERP systems. The Oracle Fusion ERP customer count is now nearly 5,500, while the NetSuite ERP customer count is over 15,000... Oracle's Autonomous Database is faster, easier-to-use, more reliable, more secure and much lower cost than Amazon's databases."
- The Board of Directors increased the authorization for share repurchases by $12.0 billion.
- Guides on the call
Agfa suitor Kanteron Systems studies multiple options after approach rebuffed - source
Kanteron Systems, the privately held Spanish medical technology company, is studying multiple options about how to proceed after Agfa-Gevaert [EBR:AGFB] rebuffed its approach, said a source familiar with the situation.
Buying the Belgian company would crystallize an obvious synergy, the source said. Agfa-Gevaert has the brand recognition and market penetration that Kanteron lacks, while its unlisted suitor believes it has more advanced precision medicine technology, the source added.
The underlying mission of both companies is to offer health professionals the best tools to treat patients, the source said.
The source declined to comment on whether Kanteron could submit an offer directly to Agfa shareholders. The source also declined to provide advisory names or to discuss a potential valuation for Agfa.
Kanteron, which made its approach for Agfa through its blog and a non-binding letter, did not disclose an indicative price.
If the deal fails, Kanteron’s objective is to get critical mass as soon as possible as there is a window of opportunity for the technology before competitors catch up with it, the source said.
The objective is to get the technology into the hands of as many doctors and hospitals as quickly as possible, the source said.
The Agfa-Gevaert Group achieved turnover of EUR 2.443bn in 2017. Kanteron does not publish sales figures, the source said.
In the blog, the suitor said that Agfa’s revenues have been stagnant, while some of its distributors have already signed up with the Spanish company’s disruptive technology in pathology and genomics.
On its website, Kanteron says that its mission is to organize clinical information to help eradicate diseases before symptoms appear. It was founded in 2005 in Valencia, Spain, and has been deployed 500 times in 12 countries.
Shares in Agfa were trading at EUR 3.95 on Monday afternoon, giving it a market value of EUR 678.47m.
A spokesperson for Kanteron declined to comment.
MergerMarket
Abertis' final leg of deal may be approved by Spanish government - sources
- No precedent for Spanish government to intervene -- consultant
- Financing banks pledge support despite question mark on details – sources
The final leg of the take-private move with regard to Abertis is likely to be approved by the Spanish government despite the regulatory problems of incoming shareholder Atlantia [BIT:ATL], according to a source briefed on the situation, an infrastructure consultant and a person familiar with it.
The Italian company is entering a consortium formed by bidders ACS [BME:ACS] and Hochtief[FRA:HOT], which delisted the Spanish infrastructure company at the beginning of last month. Shortly afterward, a bridge managed by Atlantia in Genoa collapsed, leading to the loss of 38 lives.
The Italian government has launched an investigation of the accident. The news media speculated that demand for compensation could threaten Atlantia’s entry into the consortium, or that the Spanish government could block the deal.
However, there would be no precedent for the Spanish government to intervene. The Socialist Party has an extreme minority government, which gives it little room to maneuver, the consultant said, adding that there have been no leaks in Spain to prepare the ground for a block.
The government is unlikely to block Atlantia’s move into Abertis’ capital, agreed the source and the person. The Atlantia management is focused on handling the aftermath of the accident, which means that the final leg of the deal might take longer to execute than previously thought, the person said.
There is a huge amount of paperwork involved in the deal, said a source, who is familiar with the situation. The aim is to get the deal closed as soon as possible, the source said, adding it should certainly be done by Christmas.
The deal has to be approved by the Spanish Council of Ministers. The key departments will be Economy, Industry and Defence, the consultant said, adding the change of control at Hispasat – a strategically important satellites company owned by Abertis – has already been agreed.
Though Spanish politics should be unproblematic, the possibility of asset seizures and concession cancellations in Italy creates an atmosphere of uncertainty, said the source briefed. Atlantia’s banks have said they will keep the financing in place, but skepticism would be wise, the source said. The banks remain supportive in general terms, but they might make Atlantia’s debt a little more expensive, said the person.
Meanwhile, the deal should go ahead as planned despite the accident, said the source familiar, as well as a third source and a second person familiar. Those involved in the deal are unworried, agreed a fourth source.
Though there has been a lot of hot air in the Italian news media, the strategy for executing the end-game of the deal remains the same as it has always been, said the source who is familiar with the situation.
Hochtief and its parent company ACS agreed to end a bidding war for Abertis in March. Under terms of the agreement, Atlantia withdrew its own offer, while Hochtief made a modified offer valued at around EUR 18bn. The Italian company agreed to join the consortium at the same time.
Abertis, ACS and Hochtief declined to comment. Atlantia and the Spanish government did not respond to requests for comment.