Asian equity markets have opened generally higher, following Friday’s gains seen on the Nasdaq. n the tech sector, Sharp has gained over 2%, as the company raised its FY operating profit guidance. Shares of Softbank and Hitachi have traded higher by over 1%, while Nintendo is currently flat ahead of its later today earnings report. Samsung Electronics has gained over 1.5% ahead of its earnings presentation due on Oct 31st. Nasdaq Futures are trading at around flat levels. According to a press report out of Taiwan, Apple is said to have asked suppliers for the iPhone X to double their capacities amid stronger than expected demand. Nippon Steel has declined by over 1%, as Q2 profits missed market expectations. Kobe Steel, which is expected to release its earnings report later today, has gained over 1.5%. In China Baoshan Iron & Steel has declined by over 0.4% amid the release of its earnings report. Japanese industrial name Komatsu has traded higher by over 3% after the company reported better than expected Q2 profits and raised its FY guidance. Chinese rail equipment firm CRRC Corp has gained over 1% after reporting an increase in Q3 profits.
On tomorrow’s session, China’s October manufacturing and non-manufacturing PMI data is due to be released, along with the Bank of Japan’s policy statement and forecasts.
Nikkei +0.01% Hang Seng -0.11% CSI -0.47% Shanghai -0.87% Shenzen -1.75%
Eur$ 1.1615 CNH 6.6466 CNY 6.6461 JPY 113.70 GBP 1.3137 RUB 58.0172 CHF 0.9984 WTI$ 54.05 +0.24%
S&P -0.16% EuroStoxx -0.06% FTSE -0.35% Dax -0.10% SMI -0.24%
Macro :
- ECB’s Coeure Hopes Latest QE Extension ‘Will Be The Last’: JDD
- Germany May Run EU14B Budget Surplus This Year: Spiegel
- KKR’s Europe Head Huth Says France Economy Picking up: FT
Keep an eye on :
- AIR FP : Airbus’s Enders Will Seek to Complete Current CEO Term: Figaro
- AKZA NA : Akzo Confirms Talks With Axalta on Potential Merger
- AKZA NA : Akzo Nobel, Axalta Are Said to Consider Merger of Equals: WSJ
- AZA IM : Alitalia Administrators See Bids as ‘Disappointing’: Messaggero
- ALV GY : Allianz Investing Set to Low Interest Rates, Thallinger Tells BZ
- ALV GY : Allianz Seguros Moves Base to Madrid From Barcelona
- STS IM : Ansaldo STS: EU45m Payment Made to Storstockholms Lokaltrafik
- AAPL US : Apple China Shipments Rose 40% in 3Q: Canalys
- ARAMCO IPO : FCA May Back Down on Aramco’s 5% Listing Plan, Sunday Times Says
- AV/ LN : Aviva Is Said to Reconsider Bid for Friends First: Sunday Times
- AXTA US : Axalta Spikes; M&A Price Could Be $40/Share: Seaport Global
- DB1 GY : Deutsche Boerse Confident It Will Hire New CEO This Year: FAS
- DTE GY : Merkel Should Weigh Deutsche Telekom Asset Sale With Care: WamS
- EZJ LN : easyJet to acquire part of Air Berlin operations at Berlin Tegel Airport for EUR 40m
- FCA IM : Fiat Chrysler: Completion of Intermediaries’ Sale of Gedi Shrs
- GALP PL : Galp Third Quarter Adjusted Ebitda 2.1% Below Estimates
- GTO NA : Gemalto Heads Toward ‘Normalization,’ Upgrade to Buy: HSBC
- NOVN VX : Novartis Offers $3.9b Cash for Advanced Accelerator Applications
- RMS FP : Hermes Will Open New Production Sites in France, Create Jobs
- REE SM : Red Electrica Willing to Buy 57% of Hispasat: Expansion
- RB/ LN : Reckitt Could Unlock Value Via Breakup, Sale, Buyout: Bernstein
- RIB GY : RIB Software Boosts Full Year Ebitda Forecast
- SCVB SS : Scania Sees Strong Demand in Europe, Increased Demand in Brazil
- SIE GY : Siemens Is Said to Plan Cutting Travel Expenses by EU500m: HB
- UBS SW : UBS to move 250 London staff because of Brexit
- UCG IM : UniCredit Board May Decide on New Chairman Nov 8: Sole
- DG FP : VINCI Facilities evaluates numerous M&A opportunities in Germany
- VOW3 GY : Volkswagen Reducing Tax Bill Via Luxembourg Holding: Spiegel
>>> Up
* Alba Raised to Buy at AlphaValue
* Deutsche Boerse Raised to Hold at Nord/LB, PT EU83
* Drax Raised to Equal-weight at Morgan Stanley, PT 320p
* Gemalto Raised to Buy at HSBC
* Rexel Raised to Neutral at JPMorgan, PT EU15
* SKF Raised to Equal-weight at Barclays, PT SEK190
>>> Down
* Amundi Cut to Hold at Deutsche Bank
* BBVA Cut to Reduce at Kepler Cheuvreux, PT EU7.50
* Bellway Cut to Equal-weight at Barclays, PT GBP37.79
* Berkeley Cut to Underweight at Barclays, PT GBP36.28
* DIA Cut to Market Perform at Raymond James
* IWG Cut to Neutral at JPMorgan, PT 230p
* Nobia Cut to Hold at SEB Equities, PT SEK70
* Persimmon Cut to Underweight at Barclays, PT GBP27.11
* Redrow Cut to Equal-weight at Barclays, PT GBP6.88
* Roche Cut to Add at AlphaValue
* Safran Cut to Underperform at Credit Suisse, PT EU78
* Sartorius Stedim Cut to Add at AlphaValue
* Statoil Cut to Neutral at Citi
* Taylor Wimpey Cut to Equal-weight at Barclays, PT GBP2.08
* UBS Cut to Hold at SocGen, PT CHF18
>>> Initiation
* Raiffeisen Resumed Hold at Deutsche Bank, PT EU27
>>> Call
Asia Mid-Session Update: Regional bond yields gain, as markets focus on earnings and week ahead central bank meetings
***Asia Summary***
-Asian equity markets have opened generally higher, following Friday’s gains seen on the Nasdaq.
-In the tech sector, Sharp has gained over 2%, as the company raised its FY operating profit guidance. Shares of Softbank and Hitachi have traded higher by over 1%, while Nintendo is currently flat ahead of its later today earnings report. Samsung Electronics has gained over 1.5% ahead of its earnings presentation due on Oct 31st. Nasdaq Futures are trading at around flat levels. According to a press report out of Taiwan, Apple is said to have asked suppliers for the iPhone X to double their capacities amid stronger than expected demand.
-Nippon Steel has declined by over 1%, as Q2 profits missed market expectations. Kobe Steel, which is expected to release its earnings report later today, has gained over 1.5%. In China Baoshan Iron & Steel has declined by over 0.4% amid the release of its earnings report.
-Japanese industrial name Komatsu has traded higher by over 3% after the company reported better than expected Q2 profits and raised its FY guidance. Chinese rail equipment firm CRRC Corp has gained over 1% after reporting an increase in Q3 profits. Hong Kong listed cement producer Anhui Conch has gained over 2% following its earnings report.
-PetroChina’s shares are trading higher ahead of its later today earnings report. Energy producers in Australia are trading generally higher, following the over 2% rise seen in oil prices on Friday’s US session.
-As of the time of writing, markets have traded off of their best levels. Japanese mega banks are trading generally lower on the session, following the recent gains that have been seen since Japan’s general election results.
-In China, Bank of Communications and China Merchants Bank have traded lower following their respective earnings reports. BYD is also lower by over 3%, after releasing its financial results. The overall Shanghai Composite has declined by over 1%.
-China’s 5 and 10-year government bond yields have added on to the gains seen during the prior week and are currently at the highest levels since late 2014. In South Korea, bond yields are trading lower. Earlier during the session, the Bank of Korea announced that it was planning to repurchase government bonds later this week. Looking ahead on Wednesday’s session, South Korea is due to release its Oct CPI data.
-On tomorrow’s session, China’s October manufacturing and non-manufacturing PMI data is due to be released, along with the Bank of Japan’s policy statement and forecasts. Other notable macro-economic releases for this week include, New Zealand Q3 employment change (Wed), US Fed decision (Wed), Australia Sept Trade Balance (Thursday), Bank of England decision (Thursday), Australia Sept retail sales (Friday) and US Oct Nonfarm payrolls (Friday).
-Japanese companies due to report earnings later today include Alps Electric, Casio, ibiden, Kao Corp, Konica Minota, Kyocera, Nippon Carbon, Nippon Electric Glass, Nomura, ORIX Corp, Seikisui Chemicals, Stanley Electric, Sumitomo Dainippon Pharma, TDK and West Japan Railway.
-US companies seen reporting on Monday include Mondelez International. HSBC reported Q3 results which exceeded analyst expectations.
***Key economic data***
- (JP) JAPAN SEPT RETAIL SALES M/M: 0.8% V 0.8%E; RETAIL TRADE Y/Y: 2.2% V 2.3%E; Department Store, Supermarket Sales y/y: 1.9% v 1.5%e
- (NZ) Statistics NZ: Corrects Q2 retail sales q/q to 1.7% from 2.0%; delays Q3 release on new methodology
***Speakers and Press***
Japan
- (JP) BOJ Gov Kuroda likely to stay for another 5 year term after his current term ends on April 2018 – Nikkei
- (JP) Japan FSA said to set capital requirement rules for high frequency trading (HFT) firms - Japanese Press
Korea
- (KR) Bank of Korea (BOK) Official: Planning to repurchase bonds this week to stabilize the market
China/Hong Kong
- (CN) CICC Research sees 2018 real GDP at 6.9% v 6.7% prior
Australia/New Zealand
- (AU) Australia Treasurer Morrison: Businesses are seeing best conditions since 2008
- (AU) Australia Queensland calls snap election after the ruling center-left Labor Party lost its legislative majority
- (NZ) New Zealand PM Ardern: want to legislate to ban foreign buyers of existing NZ homes before TPP-11 is ratified
***Asian Equity Indices/Futures (00:00ET)***
- Nikkei -0.2%, Hang Seng +0.0%; Shanghai Composite -0.7%; ASX200 +0.4%, Kospi +0.3%
- Equity Futures: S&P500 -0.2%; Nasdaq100 -0.1%, Dax -0.1%; FTSE100 -0.3%
***FX ranges/Commodities/Fixed Income (00:00ET)***
- EUR 1.1615-1.1594; JPY 113.83-113.52; AUD 0.7682-0.7664;NZD 0.6887-0.6840
- Dec Gold +0.1% at $1,272/oz; Dec Crude Oil +0.1% at $53.94/brl; Dec Copper -0.2% at $3.09/lb
- (AU) Australia MoF buys back A$500M in Oct 2018 and Mar 2019 bonds
- (AU) Australia MoF sells A$500M in 2029 bonds, avg yield 2.8110%, bid to cover 6.5x
- (CN) PBoC OMO: Injects CNY150B combined CNY140B in 7-day, 14-day and 63-day reverse repos v CNY140B prior; Net injection CNY40B
- USD/CNY *(CN) PBOC SETS YUAN REFERENCE RATE AT 6.6487 V 6.6473 PRIOR
- (CN) CHina MoF sells 5-yr special treasury bonds at 3.9206%
***Equities notable movers***
Australia/New Zealand
- NAB.AU Agreed to a A$30M settlement with the Australian Securities and Investments Commission (ASIC) of the Bank Bill Swap Rate (BBSW) legal action – filing; +0.1%
- COE.AU Reports Q1 production 0.43 MBOE v 0.09M BOE y/y; Rev A$14.4M v A$4.9M y/y; +6.7%
- TNG.AU Reports FY17 (A$) Net loss 4.4M v loss 7.1M y/y; Total income 504K v 6K y/y - Annual reports; -6%
Japan
- 8411.JP Said to be considering cutting up to a third of its global workforce over the next 10 years – FT; -0.1%
- 7731.JP Reports prelim H1 Net ¥14B v ¥13B guided; Op ¥23B v ¥17B guded;to discontinue China unit of imaging business; +0.8%
Korea
- 004990.KR Shares resume trading after restructuring into holding company; +17.5%
- 009150.KR Reports Q3 (KRW) Net profit 74.5B v 3.85B y/y, Op profit 103.2B v 12.8B y/y, Rev 1.84T v 1.47T y/y; +5%
- 042660.KR Resumes trading after more than 1-yr halt; -30%
'Not unrealistic' for Catalan leader to get asylum in Belgium - minister
BRUSSELS (Reuters) - Granting Catalan leader Carles Puigdemont political asylum in Belgium would be “not unrealistic” if he asks for it, the Belgian migration minister said, underlining his country’s position as a contrarian voice in the Spanish standoff.
The Madrid government sacked the Catalan leader and dismissed the region’s parliament on Friday, hours after it declared itself an independent nation.
Spain’s constitutional court has also started a review of Catalonia’s independence vote for prosecutors to decide if it constituted rebellion.
While there was no indication Puigdemont was hoping to come to Belgium, the country is one of few members of the European Union where EU citizens can ask for political asylum.
“It is not unrealistic if you look at the situation,” Belgium’s migration minister, Theo Francken, told Belgian broadcaster VTM.
“They are already talking about a prison sentence,” Francken, a member of Flemish nationalist party N-VA, said. “The question is to what extent he would get a fair trial.”
It would be difficult for Spain to extradite Puigdemont in such a case, he said.
While most European leaders have refrained from commenting on the Spanish crisis, saying it was an internal matter and the country’s constitution should prevail, Belgian Prime Minister Charles Michel called for dialogue between Madrid and Barcelona.
Michel, a centrist from French-speaking Wallonia, has governed in coalition with the N-VA since 2014, a period during which the party toned down its calls for more independence for Belgium’s Dutch-speaking North.
The relationship between Belgium and Spain soured over a similar issue in the 1990s and 2000s, when the country refused to extradite a Spanish couple wanted over alleged involvement with the Basque militant group ETA.
Weekly Performance
Dow +0.45% S&P +0.23% Nasdaq +1.09% Russell +0.73% EuroStoxx +1.31% (-0.19% in $) FTSE -0.24% Dax +1.74% Ibex -0.25% SMI -0.58% Nikkei +2.57% Hang Seng -0.17% CSI +2.42% Shnaghi +1.13% Shenzen +1.19%
Stocks began the week on a lower note as investors cashed in on last week's record highs, but reclaimed their losses on Friday, thanks to an impressive batch of technology earnings. The major indices finished the week in positive territory, with the Nasdaq, the Dow, and the S&P 500 adding 1.1%, 0.5%, and 0.2%, respectively. The S&P 500 and the Nasdaq settled Friday at new all-time highs.
The S&P 500's technology sector (+2.9%) kept the broader market afloat with little help from its peers, easily settling at the top of the sector standings. The group was underpinned by Microsoft (MSFT),Alphabet (GOOG), and Intel (INTC), which added between 4.8% and 7.4% on Friday after reporting better-than-expected earnings and revenues for the third quarter.
Amazon (AMZN) also surged on Friday, jumping 13.2%, after beating both top and bottom line estimates. The company's positive performance boosted the consumer discretionary sector, which finished the week with a gain of 1.1%.
On the downside, the health care sector (-2.1%) struggled this week, with biotechnology names leading the retreat. Celgene (CELG) showed particular weakness, ending the week lower by 19.1%, after missing revenue estimates for the third quarter and lowering its 2020 long-term financial targets on Thursday.
The consumer staples sector also lagged, moving lower by 1.5%. Within the group, CVS Health (CVS) plunged 9.8% following unconfirmed reports that the pharmacy retailer has made an offer to acquire managed health care company Aetna (AET) for more than $200 per share. Aetna shares ended the week higher by 7.6%.
Macro :
- ECB’s Coeure Hopes Latest QE Extension ‘Will Be The Last’: JDD
- Germany May Run EU14B Budget Surplus This Year: Spiegel
- KKR’s Europe Head Huth Says France Economy Picking up: FT
Keep an eye on :
- AKZA NA : Akzo Nobel, Axalta Are Said to Consider Merger of Equals: WSJ
- AZA IM : Alitalia Administrators See Bids as ‘Disappointing’: Messaggero
- ALV GY : Allianz Investing Set to Low Interest Rates, Thallinger Tells BZ
- ALV GY : Allianz Seguros Moves Base to Madrid From Barcelona
- STS IM : Ansaldo STS: EU45m Payment Made to Storstockholms Lokaltrafik
- ARAMCO IPO : FCA May Back Down on Aramco’s 5% Listing Plan, Sunday Times Says
- AV/ LN : Aviva Is Said to Reconsider Bid for Friends First: Sunday Times
- AXTA US : Axalta Spikes; M&A Price Could Be $40/Share: Seaport Global
- DB1 GY : Deutsche Boerse Confident It Will Hire New CEO This Year: FAS
- DTE GY : Merkel Should Weigh Deutsche Telekom Asset Sale With Care: WamS
- EZJ LN : easyJet to acquire part of Air Berlin operations at Berlin Tegel Airport for EUR 40m
- FCA IM : Fiat Chrysler: Completion of Intermediaries’ Sale of Gedi Shrs
- REE SM : Red Electrica Willing to Buy 57% of Hispasat: Expansion
- RB/ LN : Reckitt Could Unlock Value Via Breakup, Sale, Buyout: Bernstein
- UBS SW : UBS to move 250 London staff because of Brexit
- UCG IM : UniCredit Board May Decide on New Chairman Nov 8: Sole
- DG FP : VINCI Facilities evaluates numerous M&A opportunities in Germany
- VOW3 GY : Volkswagen Reducing Tax Bill Via Luxembourg Holding: Spiegel
Apple’s bid to become a $1 trillion company starts this week
While people spend more than $1,000 for the right to eventually get an iPhone X (as well as sell that right to eventually get an iPhone X for more than $1,500), we’re seeing Apple is doing a pretty good job of setting the stage as to whether it can make its case to Wall Street that it can be a $1 trillion company.
We’ve noted before that quarterly financial reports from companies are, generally, the moments that consistently swing stock prices for companies. And while Apple is hoarding a ton of cash, its future depends on the success of the iPhone — and, in particular, the iPhone X. While it is rolling out an updated version of the iPhone 7 in the form of the iPhone 8, the iPhone X represents Apple’s interpretation of the true next generation of that slate of glass in your pocket that controls your connection to the rest of the internet.
With that in mind, Apple in its last fiscal quarter signaled that it might have a better-than-expected third quarter — something which, again, caused Wall Street to tweak its models and ended up with a pretty significant spike in Apple’s stock price. On the year, it’s been on quite a run, up more than 40%:
Apple shares once again rose on Friday, up more than 3% and setting the company at a market cap of $842 billion. Granted, around $160 billion is a lot of ground to gain, but for Apple that actually seems possible given the expansion it’s made into new products that aim to tie together a network of devices running on Apple’s ecosystem and offering a continuous experience across the car, office, home, and walking around the city.
Which comes to this Thursday. Going into those results, we’ll have an idea of how some combination of iPhone 8 and iPhone 7 sales did, as well as some signals as to how the iPhone X is progressing. It’s not clear if Apple will be able to sate demand for the iPhone X — but, at a much higher price point, it offers a different opportunity for Apple to reach a new equilibrium in terms of how much it invests in phones versus how much it charges. The iPhone has always been a sort of premium product, and if Apple shows that it’s able to unlock demand at an even higher tier and retain it beyond just early adopters, that could add some significant momentum to its business.
In the past year or so, Apple has seen its iPhone growth engine come to a halt. While it isn’t performing poorly by any stretch of the imagination, it has put pressure on the company as it starts to see its revenue level off and temper expectations for Wall Street. It’s launched a portfolio of other devices like the AirPods, as well as some in the hopper like the HomePod, but the story on both of those have yet to play out. It’s also tried to pitch its services business hard to Wall Street as an additional incremental line that’s able to grow methodically sitting on top of its product base.
The iPhone, however, is still its driver, and you can see it in the revenue numbers. But that small signal that Apple gave in the third quarter may be a sign that the company has much bigger expectations for its performance going into the fourth quarter this year:
If Apple is going to become a $1 trillion company, that effort is going to begin in earnest tomorrow. Apple has to show that its numbers line up with a trajectory that will send it to that (largely symbolic) number, and the story that CEO Tim Cook tells on the call that accompanies each financial report is going to be just as important. The tea leaves are going to be even more critical as we look for signs as to whether Apple has unlocked a new tier of demand and starts to generate an even greater profit, as well as what the heck it is going to do with all that cash if it actually starts to ramp up a new engine.