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7 Nov 2018
GLOBAL MARKETS OVERVIEW:
Europe: All major European stock indices closed negative yesterday. France (-0.51%) and the UK (-0.89%) were hit the hardest, while Italy (-0.07%) and Germany (-0.09%) were hit the least.
STOXX 600 also closed negative yesterday (-0.26%), with 14 out of 19 sectors closing in the red. Real Estate (+0.87%) and Utilities (+0.55%) outperformed, while Basic Resources (-1.17%) and Telecoms (-1.34%) were the main laggards.
Eurozone sovereign debt market: 10-year EGB traded on a negative tone yesterday. Italy and Greece underperformed, with 10-year BTPS yields up 7.2bps to 3.392% and 10-year GGBs up 3.5bps to 4.283%.
Portugal: PSI20 followed its major European counterparts and closed negative (-0.20%) yesterday, with 11 out of 18 members closing in the red. Navigator (+0.68%) and EDP (+0.61%) outperformed, while Ramada (-1.63%) and Corticeira Amorim (-2.04%) were the main laggards.
FX & Commodities: Gold fell by 035% (+0.37% as we type), while the first future of Brent declined 1.42% (-0.19% as we type). Theeuro strengthened by 0.18% against the US dollar (+0.38% as we type).
US Equity & Debt Markets: S&P500 rose 0.63% (Nasdaq Composite +0.64%). All 11 major industry groups finished the day with gains. Materials (+1.51%) and Industrials (+1.10%) were the main outperformers. 10-year UST yields rose by 2.7bps to 3.229% (3.185% as we type).
Latin America: In Chile, the minutes of the latest MPC meeting were published yesterday. At that meeting, the MPC hiked the key policy rate by 25bps to 2.75%, in line with market expectations. The MPC highlights that the tightening cycle will probably show a gradual pace. In Brazil, the central bank also released yesterday the minutes from the 31 October MPC meeting. At that meeting, the COPOM decided to leave the SELIC policy rate unchanged at 6.50%, in a unanimous decision and in line with market expectations. The next steps in monetary policy continue to be depend, according to the minutes, on the evolution of economic activity and on the balance of risks for inflation.
Asia: Stocks traded with a mixed tone overnight: TOPIX -0.42%, HANG SENG +0.10%, SHANGHAI COMPOSITE -0.68%, HSCEI +0.08%, TAIEX +0.85%, KOSPI -0.52% and S&P/ASX200 +0.37%. S&P500 futures are up by 0.9% as we type, following the news flow around US midterm elections.
OUR TAKE ON THE LATEST MACRO DATA:
US: September JOLTS Data
The US Job Openings and Labour Turnover Survey reported total job openings of 7009mn in September, below the highest level since data were first collected in December 2000 that was recorded in August (7293mn, revised from 7136mn previously). September was also a soft month for payroll growth, with Hurricane Florence probably depressing the data.
Openings were below expectations of 7085mn. The job openings rate fell by two-tenths to 4.5% (still one of the highest readings for the current expansion). Total hires declined from 5906mn in August to 5744mn in September, while the hires rate fell by two-tenths to 3.8%. On the separations side of the survey, the total separations rate dropped by one-tenth to 3.8%. The quit rate remained stable for the second month in a row at 2.4% (the current high for the expansion), while the layoff and discharges rate fell by one-tenth to 1.1%.
Germany: September Factory Orders
Factory orders rose by 0.3%m/m in September, while the August reading was revised to +2.5%m/m (vs. +2.0%m/m previously). Excluding major orders in manufacturing, orders fell 1.6%m/m.
Domestic orders rose by 2.8%m/m, while foreign orders fell 1.4%m/m (euro area +2.4%m/m and other countries -3.7%m/m).
Spain: According to the Spanish press, the Supreme Court ruled that clients should pay the stamp duty on a mortgage formalisation (Bloomberg, El Confidential, Expansion)
Telefonica: Telefonica is considering options, including a sale of its data-center business, as it seeks to reduce debt (Bloomberg)
Red Electrica: The group signed a €150mn credit line for 5 years (Bloomberg)
Repsol: The Company is planning to amortise as much as 4.3% of its outstanding shares, according to Expansion (Bloomberg)
Logista: Logista expects mid-single digit growth of adjusted EBIT in 2019. The company expects FY 2019 Net Profit to remain similar to FY 2018. Sees higher restructuring costs in 2019 depending on business evolution in France. Board to propose to distribute €149mn in dividend for fiscal year ended in September 2018. Total dividend proposal represents 95% pay-out over FY2018 Net Income, 6.7% increase from previous year (Bloomberg)
Spain: Spain’s budget plan signals Socialists government’s commitment to continue fiscal consolidation, DBRS said in a commentary. DBRS views the fiscal target, as well as the structural adjustment of 0.4% of GDP, as feasible under current economic conditions. Some uncertainties around plan remain, particularly implementation risks, revenue assumptions might prove slightly optimistic, DBRS said (Bloomberg)
Vidrala: Vidrala gave updated 2018 guidance. Sees modest growth in organic sales, driven by prices. Sees moderate gradual expansion in operating margins. FY margins in range of 24.5% - 25%, the company commented in a regulatory filing (Bloomberg)
Mediaset: Mediaset Italy advertising sales rose 2.5% between January and September compared with 9M17 (Bloomberg)
Italy: Italy’s coalition government may not survive because members are too different, the global head of sovereigns at Fitch Ratings said in an interview (Bloomberg)
Enel: Enel 9M18 revenue rose 2% y/y to €55.2bn, company said in a statement. 9M18 adjusted EBITDA stood at €12bn, while 9M18 adjusted net income reached €2.9bn. The company approved €0.14 dividend per share to be paid from January 2019, interim dividend up 33% from the previous year. Net debt rose to €43.1bn, reflecting the acquisition of Brazilian company Eletropaulo. Enel confirmed full year net income and EBITDA targets despite negative impact from exchange rates. Net debt for 2018 seen between €41bn and €42bn, €1bn to €2bn higher than 2018-2020 strategic plan target (Bloomberg)
ENI: ENI is not present in Iran and the overall impact of the exemption from Iran sanctions will only be marginal, the company said in a statement. ENI is currently evaluating whether the exemption will allow adding Iranian oil for greater flexibility in its mix. Company will fully respect what’s decided by the International Community (Bloomberg)
Intesa: Intesa reported net income for 3Q18 of €833mn vs estimate of €791.3mn. 3Q18 Net Interest Income reached €1.84bn vs estimate €1.81bn. 3Q18 provision for loan losses stood at €519mn vs estimate €576.5mn. 3Q18 revenue was released at €4.27bn vs estimate €4.24bn. 3Q18 CET1 ratio fully-loaded stood 13.7%. 3Q net fee and commission income reached €1.92bn vs estimate €1.93bn (Bloomberg)
Snam: In a new business plan to 2022, the Company raised targets. Sees net profit growth over 4% on average per year (EPS growth over 5% on average per year and dividend growth of 5% per year to 2022) (Bloomberg)
BMW: 3Q18 sales stood at €24.74bn (vs. consensus €23.59bn). 3Q18 EBIT reached €1.75bn (vs. consensus €1.91bn). 3Q18 pretax reached €1.85bn (vs. consensus €1.91bn) (Bloomberg)
WHAT TO WATCH TODAY: On the data front, Brazil releases IPCA inflation data for October.
We will have an MPC meeting today in Poland.
Today, Germany will sell €3bn of Bund 0.25% August 2028. In the US, the Treasury will issue $19bn across the 30-year sector.
In Italy, Unicredit releases today its 3Q18 results.
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