Geneva airport closed by icy 'beast from the east
ZURICH (Reuters) - The airport in the Swiss city of Geneva closed on Thursday due to bitterly cold weather that has hit many parts of Europe this week with snow and icy winds, causing travel chaos.
“Because of the prevailing weather conditions, Genève Aéroport is currently closed to air traffic until further notice,” the airport said on its website.
“We therefore advise passengers not to come to the airport for the time being.”
A Siberian weather system forecasters have called the “beast from the east” brought snow, strong winds and the coldest temperatures for years to many regions across Europe. The freeze is expected to continue.
Geneva airport recommended passengers check with their airlines on whether upcoming flights would be scheduled for departure.
Asia Market Update: China Caixin PMI assures markets of growth; BOJ's Kataoka reiterates calls for more easing to reach 2% CPI faster; Markets weaker ahead of Powell comments
***Headlines/Economic Data***
General Trend: Asian equity markets trade mixed after earlier declines in the US
- China Feb Caixin PMI Manufacturing index rises to 6-month high, despite decline seen in the official index
- Aluminum Corp of China (CHALCO) said there was no ‘major’ information to be disclosed following its share price declines
- Chinese aluminum and steel names under pressure as markets expect President Trump to announce 20 and 25% tariffs respectively
- President Trump said to plan emergency meeting with steel and aluminum execs on Thursday
- Meanwhile, China President Xi’s top economic adviser is expected to meet on Thursday with top Trump Administration officials, including Treasury Sec Mnuchin
- BoJ dovish dissenter Kataoka reiterates more easing is needed
- US dollar (USD) in focus ahead of Fed Chair Powell’s second day of testimony
Japan
-Nikkei 225 opened -0.8%; closed -1.6%
- TOPIX Iron & Steel Index -1.8%, Electric Appliances -1.6%
- Japan mega-banks trade broadly lower, track earlier declines in the US financial sector
Automakers decline after Wednesday’s gain in the Yen
- (JP) JAPAN Q4 CAPITAL SPENDING EX SOFTWARE: 4.7% V 2.7%E; CAPITAL SPENDING Y/Y: 4.3% V 3.0%E; Company Profits: 0.9% v 5.5% prior; Company Sales: 5.9% v 4.8% prior
- Kawasaki Heavy,[-5.5%], 7012.JP Confirms quality problem with N700-Series Shinkansen car undercarriages
- (JP) Japan final Feb PMI Manufacturing: 54.1 v 54.0 prelim
- (JP) BoJ Gov Kuroda: Reiterates BOJ's easing has contributed to growth – parliament
- (JP) BoJ Kataoka: Still 'quite distant' from mulling shift from easy policy, must ease more to achieve price goal quickly ; 2019 GDP likely to fall to 0.5-1.0%
- (JP) Japan PM Abe: BOJ Gov Kuroda's policies have not been wrong to date, want him to keep working towards 2% target - parliament
-(JP) Nikkei looks at how BOJ Gov Kuroda may not serve a full term after being reappointed
-(JP) Japan MoF sells ¥2.3T v ¥2.3T indicated in 0.1% (prior 0.1%) 10-yr JGB; avg yield 0.062% v 0.088% prior; bid to cover 4.53x v 4.58x prior
Looking Ahead: Japan Jan Unemployment rate due for release on Friday, along with the Tokyo Feb CPI data
-Fast Retailing [9983.JP] is scheduled to report Feb sales on Friday (prior figures came after the market close)
Korea
-Kospi closed for holiday
- SK Telecom, 017670.KR CEO Jung-ho: Working on wearable technology called “The Sleeve” that will be enabled by the fifth-generation telecom network with Nokia Bell Labs - Korean press
- (KR) South Korea has submitted a document rebutting US trade group representing its pharmaceutical industry that Korea’s drug pricing policies favor its domestic industry - Korean press
- (KR) South Korea Feb Trade Balance: $3.31B v $2.39Be; Exports y/y: 4.0% v 0.5%e; Imports y/y: 14.8% v 12.0%e
- According to KDB GM Korea may have FY17 Net loss of KRW900B (4th consecutive year of losses) - Korean press
China/Hong Kong
-Hang Seng opened -0.3%, Shanghai Composite +0.1%
- Hang Seng Info Tech Index +2%, Energy -0.9%
- Shanghai Composite Property index has moved between gains and losses
- ASM Pacific Technology [522.HK] rises over 3% after reporting Q4 earnings
- (CN) China National People’s Congress to start on March 5th, will set economic targets for the coming year; Expected to keep GDP growth near or above 6.5%; Proactive fiscal policy is expected to be maintained - Xinhua
- (CN) China PBoC Open Market Operation (OMO): injects CNY150B in 7-day, 28-day and 63-day reverse repos v skipped prior; Net drains CNY10B
- USD/CNY (CN) PBOC SETS YUAN REFERENCE RATE AT 6.3352 V 6.3294 PRIOR
- (CN) CHINA FEB CAIXIN PMI MANUFACTURING: 51.6 V 51.3E (6-month high)
-(CN) China Securities Regulator (CSRC) said to have asked some funds to avoid net selling during National People's Congress, which may account for the selling seen this week - press
-(HK) Macau Feb Casino Rev (MOP) 24.3B v 26.3B prior; Y/Y: +5.7% v 9.0%e
Australia/New Zealand
-ASX 200 opened -0.4%; closed -0.7%
- ASX 200 Energy Index -2.2%, Utilities -1.6%, Resources -1.6%, Consumer Discretionary -0.8%, Financials -0.5%
- (NZ) New Zealand Q4 Terms of Trade Index Q/Q: 0.8% v 0.5%e
- (AU) Australia Feb AiG Perf of Manufacturing Index: 57.5 v 58.7 prior
- (AU) AUSTRALIA Q4 PRIVATE CAPITAL EXPENDITURE (CAPEX) Q/Q: -0.2% V 1.0%E; Equipment, plant, machinery investment +2.2% q/q; Buildings, structures investment -2.1% q/q; Sees 2017/18 Capex estimate +2.5% y/y; Australia companies plan to spend A$114.6B; Sees 2018/19 Capex estimate +3.5% y/y; Australia companies plan to spend A$84B
- (NZ) New Zealand sells NZ$100M in 2.5% 2040 inflation indexed bonds; avg yield 2.1987%
-(AU) Australia Prudential Regulatory Authority (APRA) Chairman Byres: 10% cap on bank lending to residential property investors was probably reaching the end of its useful life
- (AU) Australia ACCC exec general manager of specialized enforcement Bezzi: As a general matter we are concerned about potential collusion in forex markets and we do have some investigations, that I am not able to go into in any detail, that touch on some of these issues - AFR
-(AU) Australia Feb Commodity Index (AUD): 139.8 v 135.3 prior; Commodity Index SDR Y/Y: -1.0% v -0.6% prior
Other Asia
-(TW) Taiwan Central Bank Gov Yang: NT$ gains help ease import driven inflation pressures; will take appropriate monetary policy to keep inflation stable
North America
- US equity markets ended broadly lower: Dow -1.5%, S&P500 -1.1%, Nasdaq -0.8%, Russell 2000 -1.6%
- S&P500 Energy -2.3%, Materials -1.8%
-(VE) US Trump Administration Official: Does not rule out complete US oil embargo on Venezuela, says it would cause fairly strong shock to the oil market in the short-term
-(US) US said to plan announcement on Thursday, Mar 1st related to steel and aluminum imports - US press
-(US) SEC launches investigation into cryptocurrency, issued subpoenas and information requests to technology companies and advisers - financial press
- (US) DOE CRUDE: +3.0M V +2ME
Looking Ahead: US Feb ISM Manufacturing PMI to be released
Europe
- Carrefour [CA.FR]: Reports FY net -€531M v +€746M, Rev €88.2B v €85.7B y/y
Looking Ahead: UK Feb Manufacturing PMI due to be released
***Levels as of 01:00ET***
- Nikkei225 -1.6%, Hang Seng -0.4%; Shanghai Composite +0.0%; ASX200 -0.7%, Kospi -1.2%
- Equity Futures: S&P500 -0.3%; Nasdaq100 -0.2%, Dax -0.6%; FTSE100 -0.5%
- EUR 1.2199-1.2184; JPY 106.87-106.55; AUD 0.7766-0.7717;NZD 0.7211-0.7187
- Apr Gold -0.2% at $1,315/oz; Apr Crude Oil +0.0% at $61.66/brl; May Copper +0.3% at $3.14/lb
After Hours Summary: DDD +14.5%, QEP +13.5%, PTLA -23.2%, BOX -13.1%, MNST -6.9%, LB -6.8% following earnings/guidanceAfter Hours Gainers:
Companies trading higher in after hours in reaction to earnings/guidance: DDD +14.5%, QEP +13.5%, BLDR +8.2%, HABT +7.5%, HIIQ +7.4%, TWNK +6.9%, ECR +6.8%, ILG +6.1% (ticking higher), UHS +4.6%, CRM +1.6%
Companies trading higher in after hours in reaction to news: NVAX +26.3% (announces 'positive' top-line results from its Phase 1/2 clinical trial in older adults of its NanoFlu recombinant influenza vaccine compared to the leading licensed egg-based, high-dose influenza vaccine for older adults), AMD +0.6% (modestly rebounding after Moody's upgraded before the close)
After Hours Losers:
Companies trading lower in after hours in reaction to earnings/guidance: PTLA -23.2%, BOX -13.1%, HK -8.4%, MNST -6.9%, LB -6.8%, EPR -4.4%, RVNC -2.3% (Revance Therapeutics and Mylan announced a global collaboration and license agreement for the development and commercialization of a proposed biosimilar to BOTOX), AMBC -1.7% (light volume)
Companies trading lower in after hours in reaction to news: CORI -5.8% (announces proposed offering of $100 mln of convertible senior notes, provides update on fda feedback on pilot bioequivalence study), SFUN -4.7% (lower on block trade pricing), SC -2.1% (indicated lower after filing its 10-K disclosing it received Civil Investigative Demands in August), CCI -0.9% (Crown Castle commences offering of 7,765,000 shares of common stock pursuant to an effective shelf registration statement), GDDY -0.7% (announces public offering of 16,916,000 shares of Class A common stock by stockholders pursuant to an effective Registration
Closing Market Summary: Stocks Dive In Final HourStocks tumbled on Wednesday, with the bulk of the losses coming in the final hour of trading. The S&P 500 dropped 1.1%, moving below its 50-day simple moving average (2736) for the first time this week. The Nasdaq Composite (-0.8%) held up slightly better, while the Dow Jones Industrial Average (-1.5%) did slightly worse.
The major averages opened with modest gains, but retreated to their flat lines about an hour into the session. The S&P 500 then dipped into the red, but bounced back after hitting its 50-day simple moving average. However, the benchmark index broke through the key technical level on its second attempt, which further accelerated the selling.
Losses were broad on Wednesday, with 11 of 11 S&P 500 sectors finishing in negative territory.
The energy sector was the weakest group (-2.3%), moving in tandem with the price of crude oil after the Department of Energy's weekly crude oil inventory report showed that U.S. inventories rose by 3.0 million barrels last week; West Texas Intermediate crude futures dropped 2.1% to $61.66 per barrel. Shale leader EOG Resources (EOG 101.42, -5.52) was among the worst-performing energy names, dropping 5.2%, despite beating earnings and revenue estimates for the fourth quarter.
Meanwhile, the heavily-weighted health care sector (-1.6%) also finished behind the broader market, with Celgene (CELG 87.12, -8.66) leading the retreat. The biotechnology giant dropped 9.0%, settling at its lowest level in more than three years, after receiving a Refusal to File letter from the FDA regarding its multiple sclerosis drug ozanimod.
At the opposite end of the sector standings, the consumer discretionary group (-0.5%) outperformed, thanks in part to TJX (TJX 82.68, +5.37), which jumped 7.0% after reporting better-than-expected earnings and revenues for the fourth quarter and raising its profit guidance. Conversely, home improvement retailer Lowe's (LOW 89.59, -6.20) dropped 6.5% after missing fourth quarter earnings estimates and lowering its profit guidance.
The lightly-weighted real estate sector was the top-performing group with a slim loss of 0.1%.
In the bond market, U.S. Treasuries rallied on Wednesday, sending yields lower; the benchmark 10-yr yield dropped four basis points to 2.87%. Meanwhile, the 2-yr yield finished flat at 2.26%, but touched its highest level since September 2008 (2.28%) in intraday trading.
In currencies, the U.S. Dollar Index advanced 0.3% to 90.58, hitting its highest level in six weeks.
Reviewing Wednesday's batch of economic data, which included the second estimate of fourth quarter GDP, the Chicago PMI for February, Pending Home Sales for January, and the weekly MBA Mortgage Applications Index:
- The second estimate of fourth quarter GDP pointed to an expansion of 2.5% (consensus +2.5%). The first estimate came in at +2.6% last month.
- Real final sales, which exclude the change in private inventories, were revised up to 3.3% from 3.2%. The fourth quarter growth rate was the best since the second quarter of 2015.
- The Chicago PMI for February hit 61.9 (consensus 64.5), down from 65.7 in January.
- Pending Home Sales decreased 4.7% in January (consensus +0.4%). Today's reading follows an unrevised 0.5% increase in December.
- The weekly MBA Mortgage Applications Index increased 2.7% to follow last week's 6.6% decline.
On Thursday, investors will receive a slew of economic reports, including Personal Income (consensus +0.3%) and Spending (consensus +0.2%) for January at 8:30 AM ET, the PCE Price Index (consensus +0.4%) and the core PCE Price Index (consensus +0.3%) for January at 8:30 AM ET, weekly Initial Claims (consensus 227K) at 8:30 AM ET, the ISM Index for February (consensus 58.4) at 10:00 AM ET, and Construction Spending for January (consensus +0.3%) at 10:00 AM ET.
In addition, Fed Chairman Jerome Powell will appear before the Senate Banking Committee, wrapping up his semiannual monetary policy testimony, and February auto and truck sales will be released throughout the day.
- Nasdaq Composite: +5.4% YTD
- S&P 500: +1.5% YTD
- Dow Jones Industrial Average: +1.3% YTD
- Russell 2000: -1.5% YTd
Geely's 'hostile' move on Daimler is a watershed
In reality everything about Li's coup to become Daimler's largest stakeholder shows the move was hostile. It's also a watershed: Until now, the industry feared that established players such as Daimler were acutely threatened by Silicon Valley. Instead it was a Chinese upstart that made an unsolicited play for the inventor of the modern automobile.
Reports already surfaced in late November that Daimler had rebuffed advances from Li, who was seeking to acquire a small packet of around 5 percent. Clearly he felt his business proposal wasn't being considered thoroughly enough and decided a bit more leverage was needed before he would be taken seriously.
With 9.7 percent of Daimler's outstanding shares, he has now bought himself a seat at the negotiating table. Just to make sure that Zetsche's management team comes to talk with the desired attitude, Li followed up with a veiled threat that he wouldn't add to his stake "for the time being."
The irony of the whole event descends like a ton of bricks.
Thanks to China, all three major German premium brands have notched up record annual sales volumes over the past seven years straight. Mercedes-Benz has even been officially tallying the months: 58 in a row as of December. Many German car executives praise the efficiency of China's autocratic regime, talking about it as if it was a well-run company with one billion employees all working hard to achieve the goals set out by their management board. Once a decision has been taken, then it executes, delivering the desired results with total planning certainty.
This enormous dependence on China to drive further growth was highlighted recently when Daimler was forced into a humiliating apology over a harmless Mercedes posting on Instagram (officially banned in China) that featured a quote from the Dalai Lama, the spiritual leader of Tibet viewed as an enemy of the state in Beijing.
Now the very market that made Daimler and its peers rich all these years has for the first time threatened to consume them.
In the past Chinese companies have been careful not to kick up enough political dust to attract attention when arranging a deal. Whether it was Dongfeng's acquisition of a stake in PSA Group or Geely buying Volvo, the deal was always with the full support of all parties involved -- never unsolicited.
But they have become emboldened of late, perhaps as a response to the cooling down of their own economy. ChinaChem, the same company that bought tire-maker Pirelli, grabbed headlines worldwide with its $43 billion takeover of Swiss agricultural chemicals producer Syngenta in 2016 -- the biggest overseas deal by a Chinese company to date. Likewise, that year, China's Midea purchased robotics maker KUKA, kicking off a protectionism debate in Germany that came on the heels of Trump's strident attacks on Chinese trade policies during his presidential campaign.
Supervisory authorities in China responded by introducing stricter controls for acquisitions, leading to a decline last year both in the number and in the value of their European M&A deals, which fell by a third to $58 billion, according to figures from consultancy EY.
Li's purchase suggests these are loosening once more. For the moment though it is neither clear what his true intentions are, nor how Daimler might help to achieve them.
Daimler clearly does not need any help in China, having sold close to 600,000 vehicles there last year, a gain of 26 percent. It is also the only German premium automaker to be granted a stake in its local partner and maintains a second joint venture to build battery electric cars under the Denza brand. Neither would BAIC Motor nor BYD likely be happy with Li's move on their German partner from a direct domestic competitor.
But Li has backed Zetsche into a wall. How do you say no to your largest shareholder?