Dow +0.12% S&P +0.46% Nasdaq +1.05% Russell +0.55%
US Market closed higher helped by strong economic data (ADP & GDP). Health care sector (+0.6%), which houses biotech names, finished a step ahead of the broader market, near the top of the leaderboard. The top-weighted technology sector (+0.8%) also outperformed, as did the consumer discretionary (+0.7%) and materials (+0.7%) groups. countercyclical sectors underperformed, including consumer staples (unch), utilities (-0.4%), and telecom services (-0.6%). The energy sector (unch), which is considered to be a cyclical group, also struggled as the price of crude oil dropped for the fourth session in a row. US After Hours SCVL +14%, SMTC -12%, BOX -4%, FIVE -1% following earnings/guidance, DRYS down nearly 20% on huge loss/subpoena news. Asian equity markets opened mixed before trading mostly higher on stronger China PMI manufacturing, indicating that the Govt may have more room to continue tightening regulations to curb financial risks. However the services PMI fell putting downward pressure local markets. USD saw moderate strength on positive overnight US data and the resulting weaker yen sent Japan automakers and tech names into the green. As expected BOK left its rate unchanged at record low, saying it is assessing effects of government measures to cool the housing market and a recently introduced fiscal stimulus. Also said they needed more time and data before adjusting GDP forecast. PBOC skips OMO operations with a net drain of CNY100B v yesterday’s CNY10B. The PBOC set the yuan mid-point rate at the strongest setting since June 2016.
Nikkei +0.83% Hang Seng -0.67% CSI -0.61% Shanghai -0.42% Shenzen +0.05%
Eur$ 1.1876 CNH 6.6059 CNY 6.5999 JPY 110.51 GBP 1.2924 CHF 0.9634 RUB 58.5491 WTI$ 45.92 -0.09%
S&P +0.07% EuroStoxx +0.38% FTSE +0.10% DAX +0.40% SMI +0.43%
Macro :
- Trump Warns Congress Not to Disappoint on Tax Reform Passage
- Harvey May Have Solved the U.S. Auto Inventory Problem, RBC Says
- JPMorgan Offers U.S. Debt Ceiling/Shutdown Hedges on S&P 500, EM
- Cancer Breakthrough Heralds New Era of Cures, Costs and Choices
keep an eye on :
- AAPL US : Toshiba Is Said to See Western Digital Best Unit Buyer: Nikkei
- AKE FP : Arkema Sees ’No Way to Prevent’ Explosion at Flooded Texas Plant
- AZN LN : AstraZeneca Made Bid for Daiichi Sankyo Last Yr:Nikkei Business
- ATC NA : Altice USA Names Philippe Le May Chief Technology Officer
- BALN SW : Baloise eying more acquisition in Belgium
- BNP FP : France’s Saur Is Set to Be Put up for Sale: Challenges
- EN FP : Bouygues 1H Net EU240m vs Loss EU28m
- BWO AV : Buwog Gives Forecast for FY18 Recurring FFO of at Least EU125 M
- CA FP : Carrefour 1H Profit Down 12% Ex. Currency as France Margin Falls
- CEC GY : Ceconomy Loss Narrows as Online Business Improves
- FGR FP : Eiffage 1H Oper Profit Up 7.4% to EU727m, Sees Improved Results
- FGR FP : Eiffage Says Would Consider Increasing Stake In APRR, Eiffage in Talks to Buy Saipem Marine Ops
- FUM1V FH : Fortum could be eyeing both Pohjolan Voima and Uniper for acquisition
- MKS LN : Marks & Spencer in talks with Al-Futtaim about possible sale and franchise of Hong Kong and Macau stores
- MEO GY : Metro Sales Beat Analyst Estimates on Currency Tailwinds
- MSFT US : French Govt Claiming EU600M Tax From Microsoft: L’Express
- RI FP : Pernod Ricard Targets Organic Recurring Op Profit Growth 3%-5%
- STR AV : Strabag Sees Construction Output Volume Grow to at Least EU14B
- VAN BB : Van De Velde First Half Basic EPS EU1.50
- VIV FP : Italy Govt to Today Discuss Veto Powers on Vivendi: Sole
- VONN SW : Vontobel Announces 2020 Goals, Targets 50% Payout Ratio
>>> Up
* Antofagasta Raised to Buy at Jefferies, PT GBP12
* Centrica Raised to Hold at Jefferies
* HeidelbergCement Raised to Buy at Citi, PT EU95
* KAZ Minerals Raised to Buy at Jefferies, PT 1,000p
* Raiffeisen Raised to Hold at VTB Capital, PT EU29
* Serco Group Raised to Buy at UBS, PT 145p
* u-blox Raised to Buy at Baader-Helvea
>>> Down
* BHP Cut to Underperform at RBC, PT GBP13.25
* Carrefour Cut to Reduce at HSBC
* Carrefour Cut to Hold at Jefferies, PT EU18.50
* Carrefour Cut to Neutral at JPMorgan, PT EU20
* G4S Cut to Neutral at UBS, PT 300p
* Nichols Cut to Hold at Berenberg, PT GBP18.50
* Provident Cut to Hold at Jefferies, PT 940p
>>> Initiation
* Barco New Buy at Berenberg, PT EU107
* Brunello Cucinelli New Buy at Goldman, PT EU27.20
* Carmila New Buy at SocGen, PT EU29
* Credit Suisse New Neutral at Exane, PT CHF15.30
* Deutsche Bank New Underperform at Exane, PT EU12.50
* Evraz New Buy at Renaissance Capital, PT 767.40p
* Julius Baer New Outperform at Exane, PT CHF66.40
* Landis+Gyr Group New Neutral at JPMorgan, PT CHF74.50
* UBS New Outperform at Exane, PT CHF19.70
>>> Call
Fortum could be eyeing both Pohjolan Voima and Uniper for acquisition – report (translated)
31 AUG 2017
Fortum [HEL: FORTUM], the Finnish energy company may be eyeing both Finnish energy group Pohjolan Voima and Germany's Uniper [ETR: UN01] for an acquisition, a Kauppalehti Online report said.
The Finnish-language piece cited a report by the bank Nordea, which added that Pohjolan Voima is more likely a target since the company is majority owner in Olkiluoto nuclear power station, which is of interest to Fortum.
The report said that the price for Pohjolan Voima would be in the region of EUR 3bn, which Fortum can afford.
Fortum is likely to be interested in Uniper's hydro and nuclear businesses only, but it looks unlikely that the company would be sold in parts.
If Fortum was to buy all of Uniper, with the deal it would get several businesses that are not part of its strategy, the bank noted. Acquisition of Uniper would require Fortum to make disposals or shares issue, which makes Uniper less likely target, the item said.
Asia Mid-Session Market Update: Heavy economic data out of the region shows improvement, USD strength takes pressure of the yen sending Japan Equities higher
***Asia Summary***
- Asian equity markets opened mixed before trading mostly higher on stronger China PMI manufacturing, indicating that the Govt may have more room to continue tightening regulations to curb financial risks. However the services PMI fell putting downward pressure local markets. USD saw moderate strength on positive overnight US data and the resulting weaker yen sent Japan automakers and tech names into the green. ASX was higher with the last of earnings season coming in strong; standouts include Ashley Services and OM Holdings. Australia Q2 CAPEX was also higher, helped by strong commodity prices and upbeat business confidence.
- As expected BOK left its rate unchanged at record low, saying it is assessing effects of government measures to cool the housing market and a recently introduced fiscal stimulus. Also said they needed more time and data before adjusting GDP forecast. PBOC skips OMO operations with a net drain of CNY100B v yesterday’s CNY10B. The PBOC set the yuan mid-point rate at the strongest setting since June 2016.
***Key economic data***
- (CN) CHINA AUG OFFICIAL GOVT MANUFACTURING PMI: 51.7 V 51.3E; Non-Manufacturing PMI: 53.4 v 54.5 prior
- (KR) BANK OF KOREA (BOK) LEAVES REPO RATE UNCHANGED AT 1.25%; AS EXPECTED
- (CN) CHINA JUL SWIFT GLOBAL PAYMENTS (CNY): 2.0% V 1.98% PRIOR
- (KR) SOUTH KOREA JUL INDUSTRIAL PRODUCTION M/M: 1.9% V 0.5%E; Y/Y: 0.1% V -0.2%E
- (KR) SOUTH KOREA JUL CYCLICAL LEADING INDEX CHANGE: 0.2 V 0.3 PRIOR
- (UK) AUG GFK CONSUMER CONFIDENCE: -10 V -13E
- (UK) AUG LLOYDS BUSINESS BAROMETER: 17 V 30 PRIOR (1-yr low)
- (JP) JAPAN JUL PRELIM INDUSTRIAL PRODUCTION M/M: -0.8% V -0.3%E; Y/Y: 4.7% V 5.2%E
- (AU) AUSTRALIA Q2 PRIVATE CAPITAL EXPENDITURE (CAPEX) Q/Q: 0.8% V 0.2%E
***Speakers and Press***
- (CN) China to continue the restructuring of state owned enterprises (SOEs) in the steel sector - Chinese Press
- (CN) China MOFCOM Spokesperson Feng: To start campaign to protect foreign companies' intellectual properties
- (KR) South Korea Vice Defense Min in Parliament: Confirms in talks with US on remaining THAAD launcher deployment; to seek deployment of US strategic military assets
- (JP) BoJ Masai: Reiterates still some distance to achieving 2% inflation target
- (US) US Coast Guard said to partially re-open Houston Ship Channel to vessels – US financial press
***Asian Equity Indices/Futures (00:00ET)***
- Nikkei +0.9%, Hang Seng -0.6%; Shanghai Composite -0.7%, ASX200 +0.7%, Kospi -0.4%
- Equity Futures: S&P500 +0.1%; Nasdaq100 +0.2%, Dax +0.2%, FTSE100 +0.1%
***FX ranges/Commodities/Fixed Income (00:00ET)***
- EUR 1.1897-1.1872; JPY 110.61-110.23; AUD 0.7923-0.7887; NZD 0.7210-0.7164
- Dec Gold -0.4% at $1,308/oz; Oct Crude Oil -0.0% at $45.95/brl; Sept Copper +0.7% at $3.11/lb
- (CN) China PBOC skips OMO v injects CNY130B in 7-day and 14-day prior; Drains net CNY40B v drains CNY100B prior
- USD/CNY *(CN) PBOC SETS YUAN REFERENCE RATE AT 6.6010 V 6.6102 PRIOR (strongest setting since June 2016)
- (CN) China PBOC skips OMO v injects CNY130B in 7-day and 14-day prior; Drains net CNY40B v drains CNY100B prior
- (JP) Japan MoF sells ¥1.78T in 2-yr 0.1% bonds; avg yield -0.1490%; bid-to-cover 4.97x
***Equities notable movers***
Australia/New Zealand
- ASH.AU Reports FY17 (A$) Net loss 5.9M v loss 69.6M y/y; underlying EBITDA 5.7M v loss 7.7M y/y; Rev 314.7M v 276.9M y/y; +27.8%
- PRO.AU Reports FY17 (A$) Net profit 2.0M v 2.4M y/y; Rev 9.2M v 12.3M y/y; -15%
- OMH.AU Reports H1 (A$) Net loss 21.3M v loss 82.2M y/y, Rev 263M v 183M y/y (reported yesterday); +15.5%
Hong Kong/China
- 390.HK Reports H1 (CNH) Net 7.71B v 5.1B y/y, Rev 300.0B v 268B y/y; +7.3%
- 656.HK Reports H1 Net CNY5.86B v CNY4.39B y/y; Rev CNY36.3B v CNY32.5B y/y; Existing shareholder, Sisram Medical, offer 110M shares at HK$8.88-12.35/shr in Hong Kong IPO; +9.2%
Other
- COST Reports Aug Total SSS (ex gas) 5.9%; US SSS (ex gas) +6.1% v +3.9%e
After Hours Summary: SCVL +14%, SMTC -12%, BOX -4%, FIVE -1% following earnings/guidance, DRYS down nearly 20% on huge loss/subpoena newsAfter Hours Gainers:
Companies trading higher in after hours in reaction to earnings/guidance: SCVL +14.1%, CTRP +0.5%, WDAY +0.4%
Companies trading higher in after hours in reaction to news: APEN +4.9% (announces CE Mark approval for the ORBERA365 Managed Weight Loss System), OTIC +3.5% (very modest rebound after closing 80%+ lower on the day), MOMO +3.3% (initiated with Buy rating after the close at Goldman), AN +2.3% (continued strength), VVUS +2.2% (Vivus enters into a settlement agreement with Dr. Reddy's resolving patent litigation related to Qsymia), YY +2% (initiated with Buy rating after the close at Goldman), MRCY +0.9% (ticking higher; received Aerospace Standard 9100 certification for its Mercury Defense Systems Advanced Design Centers), GILD +0.7% (continued strength), TIF +0.4% (Argenta Holdings Sarl owner / Director disclosed purchase of 48936 shares valued at approx $4.4 mln)
After Hours Losers:
Companies trading lower in after hours in reaction to earnings/guidance: DRYS -18.8% (reports huge Q2 loss, co also received a subpoena from the SEC), SMTC -11.9%, BOX -4.3%, FIVE -1.2%,
Companies trading lower in after hours in reaction to news: MVIS -4.6% (announces $3.15 mln investment from current shareholder; company sold 1.5 mln unregistered shares to private investor at a price of $2.10 per share), Q -1.9% (Director/10% owner TPG Group sold shares and lowered active stake)
Carrefour hit by sharp drop in operating income
Performance in France and Argentina shows scale of challenge facing new chief
Carrefour showed the extent of the challenges facing its new chief executive as it missed analyst expectations and reported a sharp drop in recurring operating income in the first half of 2017, dragged down by performance in its home French market and Argentina.
The world’s second-largest retailer by revenues said on Wednesday after market close that recurring operating income dropped 12.1 per cent year-on-year to €621m at current exchange rates in the first six months of 2017. That underperformed Bloomberg’s analyst consensus for recurring operating income of €674.6m.
The group attributed the fall to a strong competitive and promotional environment in France, where Carrefour has been forced to cut prices in its supermarkets and hypermarkets to compete with rivals such as Leclerc. There was also an increase of losses versus the first six months of the previous year at the stores Carrefour acquired from Spanish discounter Dia in 2014.
The results are the first since Alexandre Bompard replaced Georges Plassat as chief executive of Carrefour in July. He joined from rival French retailer Fnac Darty.
Mr Bompard, who has yet to unveil his strategy for the group, said on a call with analysts: “Carrefour faces a number of challenges which are well identified. Carrefour needs to accelerate digital transformation of the group. We also need to inject new life into our hypermarkets, notably in France; we also have to raise our profitability and our cash-flow generation, simplify the organisation and meet market expectations.”
There have been two large Carrefour transactions since the first half ended. In July its Brazilian subsidiary, Atacadão, raised roughly $1.6bn in an initial public offering, the biggest in Brazil in recent years. The same month Carrefour’s property unit, Carmila, announced a €629m capital increase to fund its future expansion.
On a like-for-like basis, sales increased 2.1 per cent in the first half of the year to €43.1bn, compared with the previous year.
Carrefour cut its sales guidance for the full year 2017 to between 2 per cent and 4 per cent. The retailer said that full-year results “will be impacted by our first-half performance and an operating environment that will remain difficult in the second half in some countries”. It had previously expected sales growth of 3 per cent to 5 per cent for the full year.
“Profitability may suffer further as restructuring takes place,” wrote analysts at Kepler Cheuvreux this month. “The main question is whether Carrefour can be restructured or if it is a lost cause.”
Carrefour also announced on Wednesday that Laurent Vallée had been appointed general secretary, replacing Jérôme Bédier, who has held the role for the past five years. Most recently, Mr Vallée was general secretary of France’s constitutional court.
Closing Market Summary: S&P 500 Registers Fourth-Consecutive VictoryThe equity market rallied on Wednesday as investors continued to buy the dip that pulled the major U.S. indices from their all-time highs earlier this month. The S&P 500 (+0.5%) registered its fourth-consecutive victory, marking its longest winning streak in three months, and settled above its 50-day simple moving average (2,451.08). The Nasdaq (+1.1%) outperformed while the Dow (+0.1%) lagged.
Wednesday's session began in the wake of a strong batch of economic data, which included both a better than expected ADP National Employment Report (237,000 actual vs 180,000 Briefing.com consensus) and an above-consensus second estimate of second quarter GDP (3.0% actual vs 2.7% Briefing.com consensus).
Stocks opened the session relatively flat as investors took a moment to digest the hotter than expected reports--weighing the thought of economic growth against the thought that said growth might help justify a further tightening of monetary policy. The bulls eventually won out and then led a slow and steady climb into the afternoon.
Biotechnology stocks showed notable strength throughout the session, evidenced by the iShares Nasdaq Biotechnology ETF (IBB 324.32, +6.50), which settled higher by 2.1%. Incyte (INCY 138.27, +13.30) led the biotech rally, jumping 10.6%, following news that the company, and partner Eli Lilly (LLY 80.49, +1.94), will resubmit a new drug application for baricitinib by the end of January 2018.
The influential health care sector (+0.6%), which houses biotech names, finished a step ahead of the broader market, near the top of the leaderboard. The top-weighted technology sector (+0.8%) also outperformed, as did the consumer discretionary (+0.7%) and materials (+0.7%) groups.
Within the tech space, chipmakers exhibited notable strength, sending the PHLX Semiconductor Index higher by 1.7%. Analog Devices (ADI 83.72, +4.17) led the semiconductor rally after beating both top and bottom line estimates and issuing above-consensus guidance. ADI shares climbed 5.2% to a fresh three-month high.
On the flip side, select countercyclical sectors underperformed, including consumer staples (unch), utilities (-0.4%), and telecom services (-0.6%). The energy sector (unch), which is considered to be a cyclical group, also struggled as the price of crude oil dropped for the fourth session in a row.
The commodity held a modest gain in the early afternoon, but moved sharply lower following an EPA announcement approving emergency fuel waivers for Gulf and East Coast states in response to Tropical Storm Harvey. WTI crude futures finished lower by 0.6% at a price of $45.96/bbl.
In the bond market, U.S. Treasuries finished the midweek session on a flattish note with the benchmark 10-yr yield settling unchanged at 2.14%. Meanwhile, the 2-yr yield climbed one basis point to 1.33% after trading as high as 1.35% in the morning session.
Also of note, the U.S. Dollar Index (92.86, +0.59) climbed 0.6% after touching a multi-year low on Tuesday and the CBOE Volatility Index (VIX 11.20, -0.50) dropped 4.3%.
Reviewing Wednesday's economic data, which included the ADP Employment Change Report for August, the second estimate of second quarter GDP, and the weekly MBA Mortgage Applications Index:
- The ADP National Employment Report showed an increase of 237,000 in August (consensus 180,000) while the July reading was revised higher to 201,000 from 178,000.
- The second estimate of second quarter GDP pointed to an expansion of 3.0%, while the consensus expected a reading of 2.7%. The first estimate came in at 2.6% last month.
- The key takeaway from the report is that it was driven by a pickup in both consumer and business spending, which is typically a good mix for accelerating economic growth.
- The weekly MBA Mortgage Applications Index dropped 2.3% to follow last week's 0.5% decrease.
On Thursday, investors will receive a slew of economic reports, including July Personal Income (consensus 0.3%), Personal Spending (consensus 0.4%), and core PCE Prices (consensus 0.1%) at 8:30 ET, Initial Claims (consensus 236K) also at 8:30 ET, August Chicago PMI (consensus 58.9) at 9:45 ET, and July Pending Home Sales (consensus 0.5%) at 10:00 ET.
- Nasdaq Composite +18.3% YTD
- Dow Jones Industrial Average +10.8% YTD
- S&P 500 +9.8% YTD
- Russell 2000 +2.5% YTD
Sacai Creates Jardin for Colette Takeover
Sacai is one of the brands participating in Colette's residency program before the store closes in December.
As iconic Paris retailer Colette winds down operations, Sacai is prepping as one the brands that’s assuming a monthlong takeover of the store. Beginning Sept. 4, the Jardin Sacai, inspired by Parisian gardens, will be installed in Colette. The interior design includes trompe l’oeil hedges, a pop-up café serving Japanese Toriba coffee and toraya, a traditional Japanese dessert, and small bites made with Japanese Balmuda toasters.
The elevated area in the back of the store that’s typically used for art and photo exhibitions will display art pieces by Gelchop, the studio that makes all of Sacai’s store furniture and fixtures for the first half of September, after which the space will switch to a Craig McDean photo exhibit. There’s also a space dedicated to Fragment Design and its founder Hiroshi Fujiwara. Exclusive products and collaborations include pieces from Sacai’s men’s, women’s and children’s lines, ceramics by Astier de Villatte, Ambush, Be@rbrick by Medicom Toy, Charlotte Chesnais, Converse, Globe-Trotter, House of Voltaire, Lacoste, Levi’s jeans, Olympia Le-Tan, The North Face, Zucca and organic beauty products by Shigeta. The Lacoste collaboration merchandise will be available Sept. 4-9; The North Face merch will be available Sept. 11-16 and the Converse items will be for sale Sept. 26 to 30.
An architectural scale model of Sacai’s Jardin Colette takeover. Courtesy Photo
“Colette was one of the first retailers to begin carrying the Sacai collection when I first started my line and has always felt like home to me,” said Sacai’s founder Chitose Abe. “The idea behind Jardin Sacai came from this feeling and I wanted to create Sacai’s own garden atmosphere.”
Other brands participating in the Colette residency series include Balenciaga, Les Vacances de Lucien, offering a selection of designs from brands represented by Paris-based Lucien Pagès’ namesake public relations agency; Thom Browne from Oct. 2 to Oct. 28; Chanel from Oct. 30 to Nov. 25, and wrapping with Saint Laurent from Nov. 27 to Dec. 20.
In July, Colette’s Sarah Andelman, the stores’ creative director, purchasing manager and daughter of founder Colette Roussaux, announced plans to close the store after 20 years in business.
“Colette has always been such an important part of the history of Sacai and I was truly honored to be invited to participate in this program,” said Abe. “I feel that Sarah and I have very similar taste in what we like so I was able to have fun coming up with things and did not feel any pressure.”