Dow -0.27% S&P -0.06% NAsdaq +0.74% Russell -0.26%
US Market Closed slighlty lower but managed to bounce from lows thanks to healthcare & Tech. IBB +4.12% today +8% on the week. consumer discretionary sector (+0.1%) was the only other group to finish ahead of the benchmark index. NKE & AMZN Up FL -5%. energy sector (-1.6%) settled in the red for the third-consecutive session as crude oil continued to slide, dropping 2.3% to $42.51/bbl. financial sector (-0.8%) also finished solidly lower, suffering from broad weakness. Out of the remaining laggards, the telecom services (-1.2%) and materials (-1.1%) sectors were the weakest performers while the rest of the sectors finished with losses between 0.2% (real estate) and 0.7% (industrials). ORCL +10% and SCS -18% following earnings/guidance, APOG +5% ahead of earnings and HAIN +3% ahead of anticipated 10-Q and 10-K filings tomorrow. MSCI Asia Pacific Index rose 0.6 percent, led by financial and technology shares. yen climbed 0.2 percent to 111.12, strengthening for a third day. Takata -51.6% Resumed Trading.
Nikkei +0.03% Hang Seng +0.51% CSI +1.09% Shanghai +0.75%
Eur$ 1.1173 CNH 6.8315 CNY 6.8319 JPY 111.05 GBP 1.2673 CHF 0.9721 RUB 60.1228 WTI$ 42.44 -0.21%
S&P +0.01% EurosToxx -0.03% FTSE -0.05% DAX +0.14% SMI +0.33%
Macro :
- Fed’s Harker Joins the Rate Hike Pause Chorus: Macro Squawk Wrap
- Macron: France to Strike If Chemical Weapons Used in Syria
- Fed’s Powell Signals Willingness to Rethink Banking Regulations
- Trump Says He’s Looking at Putting Solar Panels on Border Wall
- Qatar Sovereign Fund Said to Move Stakes to Ministry: Reuters
Keep an eye on :
- ACS SM : ACS Sells 80% Stake in Balearic Islands’ Hospital Companies
- ADP FP : Vinci Said to Explore Bid for Controlling Stake in France’s ADP
- AIR FP : Airbus, Safran to Market Electric Taxi System for A320 Family
- MT NA : Bekaert and ArcelorMittal Close Sumare Deal in Brazil
- ATC NA : Altice Raises $1.9 Billion in Year’s Second-Biggest U.S. IPO (63.9Mil shares @ $30) - ATUS US
- ALT FP : Altran Techologies Shareholders to Sell 11.2% Stake in Co.
- AMZN US : Amazon Said to Sell Nike Shoes Directly Through Brand Registry
- BABA US : Chairman Jack Ma’s Stake in Alibaba Drops to 7%
- BMA SM : CVC, Blackstone, Access Industries Bid for Befesa: Economista
- CRG IM : Banca Carige Board Names Paolo Fiorentino CEO
- CNE LN : Cairn Energy May Lose 9.8% Stake in Indian Unit, BS Says
- CHTR US : Charter Communications Said to Weigh Cox Communications Buy: NYP
- CPR PL : Cimpor Says Shareholders Approve Move to Take Company Private
- DGE L N : Diageo to Acquire Casamigos Tequila Brand for Up to $1 Billion
- EDF F : EDF EN Signs Power Purchase Deal for 100 MW Wind Project in U.S.
- FGR FP : Eiffage Wins EU190m Contract to Build BNP Paribas Fortis HQ
- ENGI FP : Gas Leak at Engie’s Gjoa Field in North Sea Stopped
- FOR US : Starwood Capital Raises Forestar Offer to $15.50 Per Share
- NDA SS : Chance of Nordea Moving HQ Still Bigger Than Staying: Citi
- ROTH FP : Edmond de Rothschild Suisse Fined EU9m by Luxembourg’s CSSF
- SNAP US : Snap Said to Buy Zenly for $250m-$350m: TechCrunch
- STM FP : STMicro to Sell $1.5b Bonds, Buy Back Up to $297m of Shares
- UHR VX : Swiss Watch Exports Rise 9% in May, Customs Office Says
- UBSG VX : UBS Risks Extra French Trial in Wake of Tax-Fraud Scandal
- DG FP : Vinci Said to Explore Bid for Controlling Stake in France’s ADP
- VOW3 GY : VW Wage Talks in Slovakia ’Progress’ Amid Strike: Union Leader
>>> Up
*Alfa Laval Raised to Overweight at Morgan Stanley, PT SEK207
*Centrica Raised to Hold at HSBC, PT GBP2.02
*Colonial Raised to Add at AlphaValue
*Faroe Petroleum Raised to Overweight at Barclays, PT GBP1.10
*KPN Raised to Overweight at Barclays
*Rotork Raised to Overweight at Morgan Stanley, PT 292p
Schneider Raised to Buy at Liberum
>>> Down
*Aeroports de Paris Cut to Neutral at MainFirst, PT EU145
*Genel Energy Cut to Underweight at Barclays, PT GBP1
*KBC Cut to Hold at Kepler Cheuvreux, PT EU63
*Reckitt Benckiser Cut to Hold at SocGen, PT 8,900p
*Soco Cut to Underweight at Barclays, PT GBP1.30
*Subsea 7 Cut to Equal-weight at Morgan Stanley, PT NOK155
>>> Initiation
*C&C New Reduce at HSBC, PT EU3.00
*Global Ports Holding New Overweight at Barclays
*Global Ports Holding New Buy at Citi, PT 950p
*Global Ports Holding New Buy at Goldman
*Koninklijke Volkerwessels New Buy at ING
*Koninklijke Volkerwessels New Overweight at Morgan Stanley
*Koninklijke Volkerwessels New Buy at ABN Amro Bank, PT EU29
*Novozymes New Sell at UBS, PT DKK240
*Watkin Jones New Buy at Jefferies, PT 250p
>>> Call
Asia Mid-Session Market Update: NZD rallies on RBNZ statement with little exchange rate jawboning and positive growth outlook
***US Session Highlights***
- (IR) Iran Oil Min Zanganeh: OPEC may decide to make further oil production cuts but need to assess effect of current supply levels
- OPEC and Non-OPEC members said to see oil market re-balancing in Q2 2018
- (US) MBA MORTGAGE APPLICATIONS W/E JUN 16TH: 0.6% V 2.8% PRIOR
- (US) MAY EXISTING HOME SALES: 5.62M V 5.55ME; existing home price: $252.8K (all time high)
- (US) DOE CRUDE: -2.5M V -1ME; GASOLINE: -0.6M V +0.5ME; DISTILLATE: +1.1M V +0.5ME
- (RU) Russia govt spokesperson: to cancel meeting between Russia Dep Foreign Min and US Undersecretary of State; new sanctions continue destructive trend set by Obama administration
-Techs and health care outshined the rest of the stock market and helped the Nasdaq gain 0.7% on the day, while the Dow and Russell posted small losses and the S&P was almost flat. Oil dropped 2% on continued negative sentiment about global market oversupply, and jawboning from Iranian oil officials had little effect on price action.
***US markets on close: Dow -0.3%, S&P500 -0.1%, Nasdaq +0.7%***
- Best Sector in S&P500: Health Care
- Worst Sector in S&P500: Energy
- Biggest gainers: CA +13.4%; RHT +9.6%; INCY +7.6%
- Biggest losers: FTR -8.2%; CHK -7.9%; SIG -5.6%
- At the close: VIX 10.8 (-0.1pts); Treasuries: 2-yr 1.35% (flat), 10-yr 2.16% (+1bps), 30-yr 2.72% (-2bps)
***US movers afterhours***
- ORCL Reports Q4 $0.89 v $0.79e, Rev $10.9B v $10.5Be; Guides FY18 EPS growth to accelerate; +10.3 afterhours
- CO Reports Q4 $0.07 v $0.03 y/y, Rev $29.3M v $24.3M y/y; -2.6% afterhours
- SCS Reports Q1 $0.18 v $0.19e, Rev $735M v $745Me; Guides Q2 $0.21-0.25 v $0.38e, R$750-780M v $800Me; -17.8% afterhours
***Politics***
- (US) US President Trump: Reiterates to either renegotiate successfully or terminate NAFTA - Iowa Rally
- (US) Discussion draft of Senate healthcare bill reportedly is largely similar to the House bill, but would link insurance subsidies to age and cuts Medicaid expansion more gradually - Wash Post
***Key economic data***
- (NZ) NEW ZEALAND CENTRAL BANK (RBNZ) LEAVES OFFICIAL CASH RATE (OCR) UNCHANGED AT 1.75%; AS EXPECTED
- (NZ) New Zealand May Credit Card Spending M/M: 0.9% v 0.9% prior; Y/Y: 7.6% v 6.4% prior
***Speakers and Press***
China
- (CN) China Ministry of Commerce (MOFCOM) spokesperson Sun Jiwen: New FTZ negative list cuts foreign M&A restrictionsp; China, US still in discussion on 100-day trade plan
- (CN) PBoC adviser reiterates PBoC will not unwind balance sheet like the US Fed - Chinese Press
Japan
- (JP) BOJ Dep Gov Iwata: Monetary easing is still necessary in Japan; Inflation is still lacking momentum and is distant from target
- (JP) Japan Chief Cabinet Sec Suga: Will talk with ruling party if request for extra Diet comes
Australia/New Zealand
- (AU) BIS Oxford Economics: housing boom on Australia's east coast will be over in two years but a crash like the US subprime crisis in 2007 is not likely - AFR
- (NZ) Kiwibank economist: NZD rise due to lack of "hard" words in RBNZ Gov Wheeler's comments about the currency gains - NZ Press
Korea
- (KR) Bank of Korea (BOK) bi-annual report on financial stability: Q1 household debt to disposable income ratio 153.3%, +8.6% y/y
***Asian Equity Indices/Futures (00:00ET)***
- Nikkei +0.2%, Hang Seng +0.6%, Shanghai Composite +0.8%, ASX200 +0.9%, Kospi +0.3%
- Equity Futures: S&P500 flat; Nasdaq +0.1%, Dax +0.1%, FTSE100 +0.2%
***FX ranges/Commodities/Fixed Income (00:00ET)***
- EUR 1.1160-1.1170; JPY 110.95-111.45; AUD 0.7540-0.7560; NZD 0.7200-0.7270
- Aug Gold +0.7% at 1,254/oz; Aug Crude Oil +0.1% at $42.55/brl; July Copper -0.1% at $2.59/lb
- SPDR Gold Trust ETF daily holdings rise 0.3 tonnes to 854.0 tonnes
- (CN) PBOC SETS YUAN MID POINT AT 6.8197 V 6.8193 PRIOR; Weakest Yuan fix since May 31st and 3rd straight weaker setting
- (CN) PBOC to inject combined CNY20B v CNY40B prior in 7-day reverse repos
***Asia equities notable movers***
Australia
- Caltex (CTX) +0.6%; Guides H1
- Vicinity Centres Re (VCX) -0.9%; CEO transition
Japan
- Toshiba (6502) +0.6%; INCJ reportedly plans to take majority 50.1% stake in Toshiba's memory unit in order to keep technology located in Japan as part of consortium's acquisition - NIkkei
- Tokyo Gas (9531) +0.2%; To cut gas prices
- Takata (7312) -51.6%; Resumes trading
Hong Kong
- Citic Dameng Hldg (1091) +9.1%; Guides H1
- Wang On Group (1222) +2.7%; Reports FY17
- Emperor International Holdings (163) -1.5%; Reports FY17
- HKR International (480) -1.6%; Reports FY17
- Singamas (716) -5.5%; Guides H1
After Hours Summary: ORCL +10% and SCS -18% following earnings/guidance, APOG +5% ahead of earnings and HAIN +3% ahead of anticipated 10-Q and 10-K filings tomorrowAfter Hours Gainers:
Companies trading higher in after hours in reaction to earnings/guidance: ORCL +10.4%
Companies trading higher in after hours in reaction to news: OVAS +8.9% (appoints Christopher Kroeger as CEO effective September 1; will restructure its organization), APOG +4.8% (indicated higher ahead of earnings tomorrow before the open; also declared a quarterly cash dividend of $0.14 per share - unchanged from prior), GOOS +3.3% (still checking), HAIN +3.2% (higher in after hours ahead of anticipated 10-Q and 10-K filings tomorrow), ACN +2.7%, MSFT +0.5% (following ORCL results), NRZ +3.1% (increases quarterly dividend to $0.50 per common share from $0.48 per common share)
After Hours Losers:
Companies trading lower in after hours in reaction to earnings/guidance: SCS -18.1%,
Companies trading lower in after hours in reaction to news: ESNC -8.1% (to offer newly issued shares of common stock pursuant to an underwritten public offering), JCAP -8% (announces commencement of public offering of common stock), PZRX -5% (files mixed securities shelf offering with proposed maximum aggregate offering price of $15 mln), TMHC -2.5% (commences public offering of 10 mln shares of Class A common stock), MLHR -1.3% (light volume; following SCS earnings/guidance)
Nike (NKE) Said Close to Selling Direct on Amazon (AMZN) - Goldman Sachs
Early premarket gappers
Gapping up: DCTH +36.4%, GIGA +17%, DRAM +16.5%, CA +16.1%, LZB +12.6%, RHT +10.1%, INWK +9.2%, VCEL +5.6%, AMD +4%, ADBE +4%, PSTI +2.3%, KFY +1.4%, BUFF +1.2%, MDR +1%, WHR +0.7%, CLVS +0.6%, ERIC +0.6%, NVO +0.5%
Gapping down: EDN -10%, YPF -9.9%, BFR -7.6%, SGMO -7.3%, PAM -6.9%, CRESY -6.5%, GGAL -5.8%, CARA -5.3%, JCP -2%, TDOC -2%, TGS -1.5%, INTC -1.5%, TEO -1.3%, QCOM -1.1%, DBVT -0.8%, TS -0.6%, BMA -0.5%
Shares in Hornby are climbing this morning after Phoenix Asset Management acquired a majority stake in lossmaking toymaker and made an offer worth £12.3m for the rest of the company.
Phoenix said it had agreed to buy 20.9 per cent of Hornby, which makes Airfix planes and Scalextric cars, from New Pistoia Income Limited – taking its total holding to 55.2 per cent.
The remaining shareholders would be offered 32.38p in cash per Hornby share, said Phoenix. This compares with a closing share price on Tuesday for Hornby of 32.5p. On Wednesday, shares rose 11 per cent to 34.8p.
Regarding Hornby management, Phoenix said it:
Recognises the importance of the Hornby management team and employees to the future success of Hornby.
As the review of Hornby’s business has not yet been completed, no decisions have been made by PAMP on its long-term intentions for Hornby. Until such review is completed, [Phoenix] cannot be certain whether any changes will be necessary.
In its full-year results announced today, Hornby revealed a 15 per cent fall in revenues to £47.4m but shrunk its pre-tax losses to £9.5m – a drop of 30 per cent.
Chief executive Steve Cooke said:
Much remains to be done to return the business to sustainable profit and positive cash generation but we are confident that the changes delivered last year will underpin the progress we plan to make.
Since Q1 2016, volatility across assets, and in particular for equities, has declined and stayed remarkably low YTD. As a result, investors often ask how long the current 'boring' markets can continue, and what the risks and asset allocation implications are.
Long periods of low volatility are not as unusual as they may seem.
Low volatility tends to linger – if volatility is very low, it often stays low in the subsequent 12 months. We identify 15 low vol periods for the S&P 500 since 1928 and, on average, they lasted 18 months. The macro backdrop during those periods was very supportive, resembling a 'Goldilocks' scenario of improving growth with anchored rates and inflation, similar to now.
Timing the end of such a low volatility period is unsurprisingly difficult.
Historically, many volatility spikes were hard to predict as they often occur after unpredictable events, so-called 'unknown unknowns'. However, volatility regimes are closely linked to the business cycle. Low unemployment rates tend to anchor equity and rates volatility, whereas rising unemployment signals recession risk and a higher vol regime. The Great Moderation coupled with central bank buffering have likely helped reduce volatility structurally, in particular for bonds. But uncertainty on central bank policies could drive higher volatility going forward.
For equities we see little sign of a structural shift downwards in volatility, in part as vol of vol has increased. Low vol periods are usually 'risk on' and carry-friendly, with both equity and credit valuations increasing. However, a prolonged low vol period can also result in excessive risk taking. And it can mask correlation risk in multi-asset portfolios. As implied volatility has reached decade lows across assets, we think it is time for investors to consider all options. We like cash extraction through calls in equities and put spreads to hedge tail risk.