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Morning Prep 08/15
Global Market Overview
U.S. Equities and Futures:
- S&P Futures: Trading below the last update, further below Monday's close, weakness across European markets, and mixed to lower session in Asia.
- Growth Concerns in China: Latest worries contributing to the pullback; disappointment with policy response; asymmetric rate cut; and bearish talking points including stretched equity positioning and valuations. (opposite to what is happening in Japan as per my concern)
- Economic Calendar Highlights: Retail sales in focus; potential upside risk from credit-card data and Amazon Prime Day; Empire manufacturing; BofA August Global Fund Manager Survey showing investors least bearish since Feb'22.
Economic Concerns and Considerations:
- U.S. Rates: Some upward pressure despite traction around the disinflation theme; potential near-peak disinflation narrative; speculation about Powell's signaling at Jackson Hole; central bankers possibly flagging higher neutral rate. ( I think we are done with hikes I do not understand the hawkish behind this)
- Global Developments: China's July activity broadly below expectations; PBoC's surprise rate cut; Japan's GDP expansion; UK's basic wage growth at a record high.
- Macro-Releases: Schedule includes Jul Retail Sales, Aug Empire Manufacturing, Jul Export & Import Prices, Jun Business Inventories, Aug NAHB Housing Market Index, Jun TIC Flows, and Weekly API Crude Inventories.
European Markets:
The major European indices — FTSE 100, DAX, and CAC40 — witnessed losses of 1.57%, 1.18%, and 1.41% respectively. These losses were extended during the day, coinciding with Assumption Day celebrations in some predominantly Catholic European countries. The UK's labor market data also played a significant role, with wage growth accelerating, adding to the pressure on the BoE to further tighten policy.
- Macro-Calendar: Attention was on the German ZEW sentiment index, showing a minor improvement in August at -12.3, though the current situation index remained weak at -71.3. Other notable data include Switzerland's July PPI at 0.6% y/y, matching prior results and slightly beating expectations, and Sweden's July CPI holding steady at +9.3% y/y.
Corporate Reporting: Several companies reported earnings and updates:
- 888 Holdings: H1 EPS decreased to 2.6p from 7.8p last year.
- Marks and Spencer: Positive outlook for the year after strong trading in the first 19 weeks.
- Legal & General Group: H1 operating profit reached £1.14B, surpassing expectations and affirming future ambitions.
- Jyske Bank: Q2 EPS of DKK18.00 slightly missed estimates but confirmed FY guidance.
- Straumann Holding: H1 core net income of CHF228.7M missed consensus; reaffirmed FY guidance.
- Tecan Group: H1 adjusted net income of CHF65.8M beat FactSet estimates.
- Flughafen Zuerich: Released July traffic statistics.
- PolyPeptide Group: Reported a decline in H1 EPS to (€1.04) from €0.31 last year and announced a new CFO.
- Kantar Worldpanel: Announced the latest UK grocery share figures.
- • Speculation and Company News:
- Adnoc and Covestro: Adnoc signaled a potential increase in its offer to €60/share to start negotiations with Covestro, now under consideration by Covestro's management.
- Seadrill (SDRL.NO): Shares rose 3.8% after Q2 earnings, though details were not provided.
- Montana Aerospace (AERO.SW): Shares fell 4.8% following Q2 earnings, possibly reflecting investor disappointment.
- Hexatronic Group (HTRO.SS): A substantial 13.7% drop in share price after Q2 earnings, indicating a significant market reaction to the news.
Asian Markets Digest:
- Indices Performance: Nikkei +0.56%, Hang Seng (1.03%), Shanghai Composite (0.07%); mixed finish.
- Monetary Policy & Data: PBOC's unexpected cut in MLF rate; July activity data misses; home sales turned negative first time since early 2023.
- Real Estate Crisis: Focus on Country Garden's suspension of 11 onshore bonds after missing repayments.
- Corporate Developments: News from Japan Post, BYD, China Evergrande EV, National Australia Bank.
Corporate News Highlights:
- Earnings Calendar: Home Depot ($HD), Cardinal Health ($CAH), JD.com ($JD), Agilent Technologies ($A), Jack Henry & Associates ($JKHY).
- News Since Prior Close:
- International News: Debates on Fed's interest rate; China's consideration of stamp duty cut; Japan's GDP growth; UK's drop in food price inflation.
US Morning News
Corporate Announcements:
- $AREN (The Arena Group): Announces binding LOI to combine with Bridge Media Networks (yesterday post-close).
- $IHS (IHS Holding): Reports Q2 adjusted EBITDA $303.7M vs FactSet $286.6M [4 est, $280-293M].
- $GOL (Gol Linhas Aereas): Board approves issuance of up to 1.89B warrants - 6-K.
- $ALLY (Ally Financial): Fitch warns it may have to downgrade dozens of U.S. banks, including JPMorgan Chase (JPM) -- CNBC.
- $MAIA (MAIA Biotechnology): Files $150M mixed securities shelf - S-3.
- $COF (Capital One Financial): Reports Jul master trust.
- $HD (Home Depot): Reports Q2 EPS $4.65 vs FactSet $4.45 [29 est, $3.87-4.62]; announces $15B share repurchase authorization.
- $GCT (GigaCloud Technology), XNET (Xunlei), LEGN (Legend Biotech), etc.: Various earnings reports*
Traded Higher Post-Close:
- +40.0% $SONM (Sonim Technologies): Earnings
- +21.0% $GROV (Grove Collaborative): Discloses FTC investigation, earnings, CEO to step down, announces investment.
- +15.9% $CING (Cingulate), +14.4% LL (LL Flooring Holdings), +11.8% PPSI (Pioneer Power Solutions), etc.: Various earnings and announcements.
Traded Lower Post-Close:
- -61.2% $AAMC (Altisource Asset Management): Earnings
- -59.2% $FXLV (F45 Training Holdings): Announces intention to delist and deregister securities.
- -50.5% $TCRT (Alaunos Therapeutics): Earnings
- -32.2% $DSGN (Design Therapeutics), -27.9% MGOL (MGO Global), -27.6% DMS (Digital Media Solutions), etc.: Various earnings and announcements.
### Most-Read Stories:
- $STMN.SW (Straumann): Chairman will not seek re-election; H1 core net income reported.
- $RVRC.SS (RVRC Holding), SLGG (Super League Gaming), IPX (Iperionx): Various reports and news.
Up/Downgrades:
U.S. Earnings Today:
Economic Data:
- Germany: Aug ZEW Economic Sentiment Indicator, China Jul Retail Sales, Fixed Asset Investments, Industrial Production.
- Australia: Q2 wage price index
- PBOC: Sets yuan fixing
- Japan: Q2 preliminary GDP
Markets:
- S&P Futures: (28.8), or (0.64%) vs prior close.
- FTSE 100: (1.58%) to 7388.67.
- DAX: (1.19%) to 15715.66.
- Nikkei: +0.56% to 32238.89.
- Hang Seng: (1.03%) to 18581.11.
- Yields, Commodities, and Currency Pairs: Various changes in yield rates, crude oil prices, gold prices, and currency exchange rates.
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