MARKET CURRENTS
real-time news and commentary for investors
MARKET CURRENTS
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Today - Thursday, May 23, 2013
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10:26 AM A year after Argentina expropriated Repsol's majority stake in YPF, there's little prospect of a deal on compensation even though both sides would rather avoid a costly, drawn-out legal battle. Argentina's lack of funds and its limits on the control private firms have over their investments, which could deter Repsol from accepting assets such as the Vaca Muerta shale field in any settlement, pose major obstacles. Comment!
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9:21 AM WisdomTree (WETF) tumbles 5.2% premarket following Japan's overnight crash. The stock's more than a double this year as money has poured into its Japan Hedged Equity Fund (DXJ), which is off 7.3% premarket. Another yen-hedged Japan fund - Deutsche's far smaller DBX ETF Trust (DBJP) - is off 8.3%. Comment!
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9:15 AM SABMiller (SBMRY.PK) CEO Alan Clarke says most of the brewer's markets are growing, although North America remains sluggish. In Q1, revenue for SABMiller grew 10% to $34.5B while profit came in at $3.27B. The company notes MillerCoors sales were weak but higher-margin Tenth & Blake craft beer sold well. Latin America is a concern as growth slowed to 3% from a 9% pace a year ago. Comment!
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9:14 AM An upward revision to Q1 GDP did little for stocks in Singapore (EWS) as the Straits Times tumbles 1.77% to its lowest level in in two weeks amid global selling. Across the region: Thai equities (THD) fall 1.5%, amid "caution" before next week's central bank meeting (on down days it's "rate cut caution" on up days its "rate cut speculation"), Malaysian shares (EWM) drop 0.61% in Kuala Lumpur, and Philippine stocks (EPHE) sink 0.96% in Manila, erasing three quarters of a two-day rally. Comment!
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5:41 AM The preliminary Markit composite PMI for the eurozone prints at 47.7 in May which, albeit still squarely in contraction territory, is still a three-month high. Both services and manufacturing "saw an easing in the rate of decline" and employment dropped for the seventeenth straight month. Ultimately, "the eurozone's second recession in five years looks set to drag into a seventh successive quarter," Markit's chief economist Chris Williamson says. Comment!
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5:30 AM Japan's economy minister isn't worried about Thursday's sell-off . "I thought the pace of the Nikkei’s rise recently was faster than expected [and] the weak Chinese data prompted investors to take profits all at the same time," Akira Amari says. As for the yen: of course it rose, stocks were down, he notes. 1 Comment
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4:57 AM Monitoring the global sell-off: European markets are down sharply following the Japanese session with the FTSE -1.87%, DAX -2.6%, CAC 40 -2.45%, IBEX 35 -2.17%. Comment!
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4:42 AM Even Japanese stocks are subject to the law of gravity (who knew?) as a confluence of factors sends the Nikkei (EWJ, DXJ) plunging 7.3% on the session (the swing from intraday high to low was ~9%). Yields on JGB 10s (JGBL) spiked above 1% at one point as an already skittish and volatile market was further rattled by what have generally been perceived as hawkish comments out of Ben Bernanke and other Fed officials on Wednesday. Yields pulled back in late trading. Compounding the problem for Japanese stocks was the yen (FXY), which has strengthened some 2% against the dollar to 101.16 most recently. (See also: China HSBC flash PMI shows contraction) 8 Comments
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3:17 AM China PMI shrinks for the first time in seven months, dropping to 49.6 from 50.4 in April, missing expectations. HSBC, who collect the data, didn't mince words in an appeal to Beijing: "The cooling manufacturing activities in May reflected slower domestic demand and ongoing external headwinds. A sequential slowdown is likely in the middle of Q2, casting downside risk to China's fragile growth recovery. Moreover, the further signs of labor market slackness call for more policy support. Beijing still has fiscal ammunition to do so." ETFs: FXI, GXC, PGJ, YAO, FCHI, PEK, CAF, YXI, XPP, FXP, MCHI, YINN, YANG, TCHI, CHXF; BONDS: RMB, DSUM, CHLC, CNY, CYB, FXCH Comment!
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3:08 AM Equity futures turn sharply lower overnight, possibly in reaction to weak manufacturing data out of China and a mini-crash in Japan that left the Topix -6.9%. Factory activity in China shrunk for the first time in 7 months, reflecting "slower domestic demand and ongoing external headwinds." S&P futures currently -1.1% to 1637.50 after dropping below 1634 when European markets first opened. 12 Comments
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Wednesday, May 22, 2013
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10:06 PM China HSBC flash PMI prints in contraction territory for the first time in seven months, coming in at 49.6, down from a final reading of 50.4 in April. The new orders sub-index falls to 49.5 (eight month low) while new export orders stabilize a bit from last month. Comment!
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8:41 PM Singapore revises Q1 GDP up to show a 1.8% Q/Q expansion (seasonally adjusted, annualized) versus an advance estimate of a 1.4% decline. On a Y/Y basis the economy expanded 0.2%. The Ministry of Trade and Industry says "economic growth … is expected to improve gradually over the course of the year." The Singapore ETF (EWS) is up 19.8% Y/Y. Comment!
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8:31 PM Japanese stocks move up in early trading, with the Nikkei Average rising 0.7% as a weakened yen gives a boost to exporters and offsets early losses in banks: Canon (CAJ +3.4%), Fast Retailing (FRCOY.PK +2.9%), Fanuc (FANUY.PK +1%), Sumitomo Mitsui Trust (SUTNY.PK -1.9%), Shinsei Bank (SKLKY.PK -2%). Comment!
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8:20 PM Citi's Willem Buiter throws in the towel on a "Grexit" in 2014, notable not only because Buiter has repeatedly predicted Greece will eventually bid the eurozone adieu (putting the odds at 90% within 12-18 months late last summer) but because he is credited with coining the term "Grexit" in the first place. Bears needn't despair too much though: Buiter still says "there is a fairly high risk of Grexit at some stage in the coming years." 2 Comments
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3:57 PM Telecom Italia (TI -2.3%) is said to value fixed-line assets at about $18B as it prepares to spin them off. The valuation, which doesn’t take into account debt, is based on six times Ebitda. TI's board is scheduled to meet tomorrow in Rome to complete a review of the spinoff plan, a move that could generate cash to help the former phone monopoly pare debt and reinvest in expanding coverage. Comment!
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1:09 PM Sparton (SPA +2.2%) gains today after saying that it and USSI, a subsidiary of Ultra Electronics Holdings, have won $8.8M in joint foreign sales contracts for the manufacture of multiple Passive and Active Sonobuoys to the South Korean Government. Production will be done from their ERAPSCO/SonobuoyTech Systems joint venture, and should be completed by March, 2014. Comment!
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11:20 AM GlaxoSmithKline (GSK +1%) says it's been awarded up to $200M by the U.S. government to develop new antibiotics. Under the terms of the agreement, GSK will collaborate with the Biomedical Advanced Research and Development Authority, which is part of the U.S. Department of Health and Human Services, to develop several antibiotics to fight antibiotic resistance and bio-terrorism. GSK will receive $40M for the initial 18-month agreement and up to a total of $200M if the agreement is renewed over five years. 1 Comment
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