CHINA PRESIDENT XI SAYS IF CHINA AND U.S. ABLE TO DEVELOP A GOOD RELATIONSHIP, IT WILL BENEFIT PEACE, STABILITY AND PROSPERITY GLOBALLY
Stocks in Asia struggled for direction Wednesday, while Chinese shares slumped as concerns lingered over the impact of potential global trade restrictions. The dollar and Treasury yields steadied.
The steepest declines were in Hong Kong and China, with Chinese shares sliding for a third day and extending a bear market, as the yuan continued to weaken. Equity benchmarks in Tokyo ended little changed after swinging between gains and losses, and the yen climbed. A gauge of energy companies on the MSCI Asia Pacific Index of stocks rose as oil consolidated above $70 a barrel following reports the U.S. is pressing allies to halt imports of Iranian crude. European futures signaled a softer open for equities.
Nikkei -0.31% HAng Seng -1.07% CSI -2.04% Shanghai -1.16% Shenzen -1.20%
eur$ 1.1660 CNH 6.5984 CNY 6.5942 JPY 109.82 GBP 1.3226 CHF 0.9899 RUB 63.1416 WTI$ 70.87 +0.93%
S&P -0.34% EuroStoxx -0.24% Dax -0.06% FTSE +0.03% SMI -0.12%
Macro :
- Morgan Stanley Sees ‘Rolling Bear’ Reaching High-Quality Stocks
Keep an eye on :
- AED BB : Aedifica to Buy Senior Housing Site in Germany for About EU10m
- AC FP : Accor Is Said to Seek Partners for Air France-KLM Stake: FT - https://on.ft.com/2ly47EO
- ANDR AV : Andritz Upgraded to Buy at Hauck & Aufhaeuser; PT 51 Euros
- BNP FP : Banca March Seen Favorite for BNP Client Portfolio: Cinco Dias
- BP/ LN : Trump Power Plan Could Create ’Uncertainty’: BP Energy CEO
- BN FP : Danone Will Cut Morocco Prices Amid Boycott, Vows Not to Leave
- BNZL LN : Bunzl Sees 1H Revenue Up by 11%, Expects More Acquisitions
- CRAW LN : Crawshaw Group Sales Drop 1.6%, Like-For Like Sales Down 12.9%
- DTE GY : Priebus Is Said to Have Offered Advice to T-Mobile: Politico
- EDR SM : EDreams Sees Adj. Ebitda of EU118M for 2019 Fiscal Year
- ENI IM : Mozambique Sees Gas Starting to Flow by End of 2022
- EQNR NO : Sonangol, Equinor Sign MoU to Bolster Angola Oil Output
- FJET LN : Fastjet In Talks About Potential Equity Fundraising Amid Risk
- FRU GY : Ferratum Cuts Full Year Revenue Forecast
- GLPG NA : Galapagos Eligible to Get EU9m as Rochella Phase 2 Trial Begins
- IGG LN : IG Markets Ltd Fined EU500,000 by French Markets Regulator
- IWG LN : IWG Says Prime Opportunities Offer Deadline Extended to July 21
- IWG LN : IWG Sees 2018 Operating Profit Below Views by ~GBP15M-GBP20M
- ISAT LN : French group folds, giving EchoStar chance to show hand for UK satellite group - https://on.ft.com/2N09Hfz
- JD/ LN : JD Sports Can Reach ‘Next Level’ With Finish Line: Peel Hunt
- DEC FP : APN Outdoor ‘Highly Unlikely’ to Get a Better Offer: Morgans
- LIGHT NA : Tybourne Equity Master Fund Reports Signify Short of 1.77%: AFM
- NRX FP : Givaudan Starts Tender Offer for Outstanding Naturex Shares
- OHL SM : Obrascon Huarte Names Cuadrado Chairman, Retribitions
- POG LN : Petropavlovsk Is Said to Weigh Options as Investor Vote Looms
- POM FP : Plastic Omnium Completes Purchase of Additional 33.3% of HBPO
- REACH NO : Reach Subsea Wins Equinor Frame Pact for 3 Years With Options
- RR/ LN : Rolls-Royce’s New Boeing 787 Engine Faces Wear-Issue Inspections
- RUI FP : Rubis Cut as Momentum Mixed, But M&A is Upside Risk: Berenberg
- SAS SS : SAS Holder Norway to Offer Up to 37.8m Shrs via Nordea
- SHP LN : Takeda CEO Comfortable W/ Competition to Shire Haemophilia: FT
- SIV LN : St Ives CEO Armitage to Retire, Schwan Named as Successor
- ILE LN : Ultra Electronics Lowers FY Op. Profit Guidance by GBP4m-GBP6m
- DG FP : French Govt to Terminate Nantes Airport Contract W/ Vinci: AFP
- VOW3 GY : VW Details Disruption From Switch to New EU Emissions Regime
- VOW3 GY : Audi Postpones E-SUV Premiere After Stadler Arrest: Magazine
- VOW# GY : VW Defeats Missouri Lawsuit Over Diesel Emissions Cheating
- WTB LN : Whitbread First Quarter Comparable Sales -1.3%
- XAR LN : Xaar 5-Mo. Legacy Ceramic Sales Miss Plan; Cost Cuts Planned
- XIL FP : Xilam Plans Capital Increase of About EU16M Through Placement
- XIOR BB : Xior Completes Purchase on Bonnefanten College in Maastricht
>>> Up
* Adecco Upgraded to Outperform at RBC; Price Target 73 Francs
* Aggreko Upgraded to Neutral at Credit Suisse; PT 6.50 Pounds
* Bertrandt Raised to Buy at M.M. Warburg; Price Target 105 Euros
* Carnival Plc Upgraded to Buy at Berenberg
* *COVESTRO RAISED TO BUY VS HOLD AT BAADER HELVEA
* GE Upgraded to Market Perform at Oppenheimer
* Petrofac Upgraded to Buy at Kepler Cheuvreux; PT 6.60 Pounds
* Sainsbury Upgraded to Overweight at Barclays; PT 3.75 Pounds
* SGS Upgraded to Overweight at Barclays; PT 2,850 Francs
>>> Down
* Altamir Downgraded to Hold at Jefferies
* Balyo Downgraded to Add at Gilbert Dupont
* BMW Downgraded to Reduce at AlphaValue
* Elior Group Cut to Neutral at Credit Suisse; PT 13.90 Euros
* Gerresheimer Downgraded to Hold at Bankhaus Lampe
* Gima TT Downgraded to Hold at Kepler Cheuvreux; PT 16.70 Euros
* ICG Enterprise Trust Downgraded to Hold at Jefferies
* Merlin Downgraded to Hold at SocGen; PT 13.70 Euros
* Rubis Downgraded to Hold at Berenberg
>>> Initiation
* Adyen Rated New Buy at Berenberg; PT 590 Euros
* Corestate Rated New Buy at Bankhaus Lampe; PT 66 Euros
* Eutelsat Reinstated at Goldman With Neutral
* Inmarsat Reinstated at Goldman With Neutral
* Independent Oil & Gas Rated New Buy at Peel Hunt; PT 60 Pence
* Puma Rated New Neutral at Wedbush; PT 465 Euros
>>> Call
After Hours Summary: DAC +19%, SONC -9%, AVAV -6% following earnings/guidance, WWE +6% on USA Network/Fox Sports dealAfter Hours Gainers:
Companies trading higher in after hours in reaction to earnings/guidance: DAC +19.4%
Companies trading higher in after hours in reaction to news: WWE +5.8% (World Wrestling secures multi-year media rights deals with USA Network and Fox Sports; provides 2019 outlook - will host a conference call), ATI +1.3% (ticking higher; initiated with Overweight at Stephens), DCP +0.8% (upgraded to Buy from Neutral at Goldman), HEAR +0.3% (higher after announcing another 'significant' partnership as the official audio partner for Australian esports organization Tainted Minds)
After Hours Losers:
Companies trading lower in after hours in reaction to earnings/guidance: SONC -8.7%, AVAV -6.2%
Companies trading lower in after hours in reaction to news: DRRX -10.9% (Pain Therapeutics reports the FDA Advisory Committee voted 14 to 3 against the approval of REMOXY ER for the management of pain), FOLD -10.3% (received written guidance from the CHMP Scientific Advice Working Party), CNXM -9.1% (commences offering of 5 mln common units representing limited partner interests in the Partnership by NBL Midstream), SBLK -7.5% (commences secondary public offering of 5 mln shares of common stock by selling shareholder Oaktree Capital), TUSK -0.6% (announces underwritten public offering of 4 mln shares of common stock by selling shareholders), CEQP -0.3% (downgraded to Neutral from Buy at Goldman)
Closing Market Summary: Energy Leads Modest ReboundStocks rebounded modestly on Tuesday -- reclaiming less than a fifth of their Monday losses -- with energy shares leading the way, helped by a spike in oil prices. The S&P 500 ended higher by 0.2% after finding early support at its 50-day moving average. Small caps outperformed, pushing the Russell 2000 up 0.7%.
Late Monday comments from President Trump's top trade adviser Peter Navarro, who said the White House is not planning to restrict foreign investment as part of its trade actions against China or any other country, continued to be analyzed on Tuesday in the absence of any new developments in the ongoing U.S.-China trade feud.
The energy sector finished atop the S&P 500 sector standings with a gain of 1.4%. News that the U.S. State Department will start imposing powerful sanctions on companies that buy Iranian crude oil past the end of October prompted a crude oil rally -- which, in turn, sent energy stocks higher. WTI crude futures advanced 3.5% to $70.45 per barrel, hitting their highest level in five weeks.
Cyclical sectors, including energy (+1.4%), consumer discretionary (+0.7%), and information technology (+0.5%), finished mostly in the green, with financials (-0.4%) being an exception. Like financials, the countercyclical health care (-0.3%), telecom services (-0.4%), and consumer staples (-0.5%) spaces posted modest declines.
In corporate news, General Electric (GE 13.74, +0.99) spiked 7.8% after announcing plans to spin off its health care business and plans to sell its 62.5% stake in oil and gas company Baker Hughes (BHGE 33.13, +0.69). Also, GE was officially booted from the Dow on Tuesday, replaced by Walgreens Boots Alliance (WBA 66.57, -0.67).
Separately, homebuilder Lennar (LEN 51.61, +2.39) advanced 4.9% after reporting better-than-expected quarterly results, but Harley-Davidson (HOG 41.32, -0.25) slid 0.6% after a series of tweets from President Trump, who criticized the company's decision to move some of its operations overseas due to retaliatory EU tariffs.
Reviewing Tuesday's economic data, which included the Conference Board's Consumer Confidence Index for June and the Case-Shiller 20-City Index for April:
- The consumer confidence reading for June decreased to 126.4 (consensus 127.1) from the prior month's revised reading of 128.8 (from 128.0).
- The key takeaway from the report is that the downturn was driven by a downshift in the Expectations Index, which suggests, according to the Conference Board, that consumers don't anticipate the economy gaining much momentum in the coming months.
- The Case-Shiller 20-City Index increased 6.6% in April (consensus +6.8%), and the March increase was revised to 6.7% from 6.8%.
On Wednesday, investors will receive the Durable Goods Orders report for May, the advance readings for May Wholesale Inventories and International Trade in Goods, the Pending Home Sales report for May, and the weekly MBA Mortgage Applications Index.
- Nasdaq Composite +9.5% YTD
- Russell 2000 +8.7% YTD
- S&P 500 +1.9% YTD
- Dow Jones Industrial Average -1.8% YTD
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Inmarsat/Eutelsat: making waves
French group folds, giving EchoStar chance to show hand for UK satellite group
Satellites relay information at high-speed. So does Rodolphe Belmer, boss of Eutelsat. The French satellite operator withdrew its bid for British rival Inmarsat just a day after it showed interest. Inmarsat shareholders should not lament the resulting dip in shares. Eutelsat’s bid interest followed a previous attempt from EchoStar. More will come.
The logic behind Eutelsat’s shortlived offer is clear: two-thirds of its revenues come from traditional video services, which are fixed satellite services. These are declining as linear television falls out of favour with consumers. Total revenues fell 3 per cent last year. Inmarsat might be struggling for growth, partly through its active offering in mobile data provision — the holy grail of satellite operators. Maritime data represents its largest source of revenue and it is making a push into broadband provision for European aviation. At £5, Inmarsat shares are half the value they were at the start of 2016 and look like an inexpensive way into mobile services.
The bid also makes sense in terms of scale. A larger company will be better equipped to buy the next generation of expensive satellites.
US satellite operator Echostar’s bid follows a similar logic. Like Eutelsat, EchoStar operates in the fixed-satellite sphere so it could benefit from a move into mobile. Boss Charlie Ergen’s past as a professional poker player may offer a hint as to his next move.
Analysts at RBC think Inmarsat is worth at least double its market value. This is in large part because of the company’s US L-band spectrum, which Inmarsat currently leases to Ligado Networks, a company Echostar’s sister company Dish tried to buy in 2012. L-band is assigned for use by satellites but the hope is that it can be used to cover gaps in mobile coverage when 5G is rolled out and be reclassified as mobile. Mr Ergen has until July 6 to show his hand. Investors should hold ‘em until then.