2018Jan

FC: GLOBAL MARKETS AND NEWS ROUND-UP / OUTLOOK January 10, 2018 at 07:05AM

fcfx

UK seen flat / DAX down 8 / CAC up 4 / EStoxx50 up 1

MARKET HOLIDAYS:

None

US MARKETS (% move from European close):

Dow -0.03 25385.8

S&P -0.21 2751.29

Nasdaq -0.12 7163.578

VIX 4.02 10.08

US cash equity markets rose to new record levels yesterday afternoon with the S&P 500 and Nasdaq Composite now on a six-day winning streak (DJIA +0.4%, S&P +0.1%, NASDAQ +0.1%). Banks and healthcare related stocks are leading gains while retailer Target jumped after their hiked both fourth-quarter and full-year guidance before the open. Treasuries moved lower for the most part with a steeping observed in the yield curve. US government bonds were largely unresponsive to a strong 3-year note sale as it stopped through by 0.6 basis points to yield 2.080%. Elsewhere, the Dollar Index is holding a modest gain but the Japanese Yen remains the best performing G10 currency after the BoJ trimmed the amount of its purchases of Japanese government bonds. This added to speculation that Kuroda may soon announce a tapering of the sizeable asset purchase program. Oil prices also jumped in the afternoon with US crude futures settling at $62.96 (+$1.23) after briefly rising above $63.00, its highest level in more than 3-years.

AFTER HOUR MOVERS:

United Continental Holdings +2.1% prelim unit revs beat forecasts, Domino’s Pizza -2.3% CEO will hand reins to the International Chief in July, SYNNEX -1.9% named Dennis Polk as CEO succeeding Kevin Murai, Nordstrom -1.2% ended rocky year with modest holiday sales growth

DUE TODAY: Lennar Corp, MSC Industrial

AFTER MARKET: Nothing Due

ADR MOVERS SINCE EUROPEAN CLOSE:

Telecom Italia +1.22%, Linde +1.07%, GKN +1.01%, Aperam +1.01%,

ASIAN MARKETS:

Nikkei -0.26 23788.20

Hang Seng 0.38 31130.33

Shanghai 0.14 3418.52

Australia -0.64 6096.68

Asian equity markets traded mixed (NIKKEI -0.2 %, S&P/ASX -0.6 %, SHANGHAI COMPOSITE +0.2 %) as investors digested Chinese inflation data for December – CPI rose less than expected, up 0.3% (f/c +0.4%) m/m and 0.3% (f/c +0.4%) y/y, while PPI gained 4.9% (f/c +4.8%) y/y. In currency space, the Yen continued its rally in the Asian session following yesterday’s BoJ announcement that it was trimming its JGB purchases in the 10-25 year and over 25-year maturities. Following the inter-Korean discussions yesterday, South Korean President Moon said he does not want a reunification of two Korea’s immediately, adding his goal is to resolve the nuclear issue with North Korea and create firm peace. Moon also said further provocation from North Korea will be met with additional sanctions, adding they are open to any type of summit with North Korea. He also stated inter- Korean talks may be a result of sanctions and pressure. Lastly, Moon mentioned US President Trump deserves large credit for bringing about inter-Korean talks. Elsewhere, ratings agency Moody’s said APAC sovereign outlook for 2018 stable as favourable growth balances high leverage. In other news, the PBoC set the yuan mid-point at 6.5207 against the Dollar, its weakest fixing since December 29th 2017.

M & A:

-JULIUS BAER announced it is purchasing the 20% it doesn’t already own of Italian wealth manager Kairos Investment Management for €96m

-AKZO NOBEL has named four suitors they have made it to the second round of bidding for its €10bn chemical division. The combination of Lanxess and Apollo Global are amongst those in the running along with Carlyle Group and at least one more investment firm according to people familiar with the matter

-GLAXOSMITHKLINE CEO Emma Walmsley said that the company would have a look at Pfizer’s consumer products business, but would not overpay for the asset

-ROCHE has started cash tender offer for all outstanding shares of common stock of Ignyta at $27 a share with period expiring 12am on 7th February

-FERRERO is said have increased its offer for Nestle’s Crunch to $2.5bn

-REPSOL is in talks to sell 20% of Gas Natural to CVC according to a report in Expansion

-TELE2 & Com Hem have agreed to merge to create second largest mobile phone and fixed broadband provider in Sweden as well as becoming the leader in digital TV

-RIO TINTO agreed to sell its Dunkirk aluminium smelter to Liberty House

COMPANY NEWS:

-CONTINENTAL CEO Elmar Degenhart confirmed the company is holding exploratory talks with advisers on possible changes to its structure, stating the company is in the “early stages” of analysing its organisation with the aim of becoming more flexible. CFO Wolfgang Schaefer said the review is “wide open” and no decisions have yet been made alluding to the possibility of an update within 6 months. Degenhart said he is “not hesitant to implement changes if needed” and added the company sees an opportunity for the company in solid-state battery technology for the powering of cars

-GLAXOSMITHKLINE with a new head of R&D, Hal Barron, some programs could “potentially fall away” while others are accelerated according to CEO Emma Walmsley talking at JPM Healthcare Conf

-ROCHE’s head of pharmaceuticals said he’s confident that the Swiss drugmaker’s pipeline of new products will offset lost sales from the upcoming arrival of copycats of its three biggest money-makers

-TOTAL is to issue 7.09m new shares for 2nd interim dividend payment, with payment set at €46.55

-AIRBUS China will finalise orders for 184 A320 aircraft soon according to French President Emmanuel Macron after holding talks with Chinese counterpart Xi Jinping

-BBVA said it would take a €1.12bn charge for its stake in Telefonica because the phone company’s share price declined last year

-UK BANKS EU chief Brexit negotiator Michel Barnier maintained his hard-line stance over UK.banks’ access to EU markets after Britain leaves, offering only a glimmer of hope that the bloc could be prepared to acknowledge some rules as equivalent. Barnier, who has previously warned that British financial companies will lose so-called passporting rights that allow them to operate freely across the EU, went a step further on Tuesday saying there could be no blanket move to recognize the equivalence of rules across the two sides of the Channel, however he added there may be cases where the EU could “consider certain UK rules as equivalent, based on a proportionate and risk-based approach”

-RYANAIR has given Dublin based pilots until 17th January to accept the 20% pay rises they previously turned down

-TELECOM ITALIA is considering cutting about 7000 jobs (14%) of its local workforce in order to be more profitable and more efficient according to reports

-BAYER & J&J persuaded a Pennsylvania judge to throw out a jury verdict of more than $27m over a woman’s injuries tied to the blood-thinning drug Xarelto. Philadelphia Court of Common Pleas Judge Michael Erdos Tuesday concluded a procedural flaw in Lynn Hartman’s case required the verdict to be set aside, voiding the companies’ first trial loss over Xarelto

-BASILEA completed extension of license agreement with Pfizer for its antifungal Cresemba (isavuconazole) to include China (with Hong Kong, Macao), sixteen countries in the Asia Pacific region

EUROPEAN EX-DIV’S:

Nothing due

COMMODITY SNAPSHOT (% move from European Close):

Gold -0.15 1309.72

Copper 0.17 54470

Oil 1.73 63.45

Natural Gas 4.56 2.978

EUR/USD 0.05 1.1928

GBP/USD 0.01 1.3517

RESEARCH HIGHLIGHTS:

VEOLIA cut to neutral as GSCO, RELX raised to buy at GSCO, BARCLAYS & LLOYDS cut to equal weight at MOST, RBS raised to overweight at MOST, HIK cut to underperform at JEFF, FIRESTONE DIAMONDS raised to outperform at RBC, ORKLA cut to hold at KEPLER, CHEMRING rated new buy at BERENBERG,

STILL TO COME:

NUMBERS: Dustin Group, GCP Infrastructure, Lufthansa, Marshalls, Page Group, Superdry, Takeaway.com, Taylor Wimpey, Ted Baker, Tullow Oil

MACRO:

EU: FR Industrial Prod Nov MoM, FR Industrial Prod Nov YoY, FR Manufacturing Prod Nov MoM, FR Manufacturing Prod Nov YoY, UK Industrial Prod Nov MoM, UK Industrial Prod Nov YoY, UK Manufacturing Prod Nov MoM, UK Manufacturing Prod Nov YoY, UK Construction Output SA Nov MoM, UK Construction Output SA Nov YoY, UK Visible Trade Balance Nov GBP/Mn, UK Trade Balance Non EU Nov GBP/Mn, UK Trade Balance Nov, UK NIESR GDP Est Dec

US: MBA Mortgagee Apllication, Import Price Index Dec MoM, Import Price Index ex Petrol Dec, Import Price Index Dec YoY, Export Price Index Dec MoM, Export Price Index Dec YoY, Wholesale Inventories Nov MoM, Wholesale Trade Sales Nov MoM

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