By Paddy Power Trader
Chinese industrial profits in a wide sample of provinces rose 71.8% in the first half of the year from the same period a year earlier, according to the National Bureau of Statistics.
UK News
The pace of the UK second quarter economic growth was a blip and it isn’t time for the Bank of England to begin removing stimulus, the National Institute of Economic and Social Research said. (Sources/FT/Telegraph) ‘I don’t think that growth rate will be sustained’, NIESR economist Simon Kirby told reporters in London. ‘Far from that I think the growth rate will fall back somewhat quite sharply’, Kirby said. NIESR said that the emergency budget, far from threatening to plunge the UK back into decline, makes little difference to the likelihood of a double dip recession. It also said that house prices will fall in real terms over the next five years as inflation outstrips meagre rises in property values.
US News
T-notes were on a downward trend on Tuesday despite disappointing consumer confidence data. Treasuries pared some of the losses following the weak economic data, but were fairly muted following a well received 2-y note auction, which drew the lowest yield on record. At the close; t-notes finished 13+ ticks at 122.10. At 0630BST UST’s were trading little changed up 1 tick at 122.11+.
USD 38bln (Act) 2y note auction received a b/c 3.33 vs. Avg. 3.15 (Prev. 3.45) and Indirects were 32.8% vs. Exp. 39.35% (Prev. 41.41%). The auction drew a yield of 0.665% vs. Exp. 0.675% with a total of 88.09% of issuance was allotted at the high. (RTRS)
ABC Consumer Confidence (Jul 25) W/W -48 vs. Exp. -46 (Prev. -45) (RTRS)
European News
Greece ‘ahead of the curve’ on fiscal targets. (FT) Greece is determined to show it can outperform tough fiscal targets set by the EU and IMF according to Finance minister, George Papaconstantinou.
Spain’s finance minister Salgado said Spain’s publication of stress tests on banks and structural reforms are boosting market confidence and reducing its borrowing costs. Salgado added that risk premium on Spanish debt should be lower. (Sources/El Pais)
Belgium challenged over deficit figures. (FT) The solidity of Belgium’s public finances was called into question yesterday after an independent budget watchdog challenged the government’s tax revenue forecasts and warned of higher budget deficits.
France Total Jobseekers (Jun) M/M 2691.0 vs. Exp. 2690.6 (Prev. 2699.6) (RTRS) France Jobseekers Net Change (Jun) M/M -8.6 vs. Exp. 10.0 (Prev. 22.6) (RTRS)
Asian News
JGBs fell overnight as a jump in Tokyo shares and a drop in US Treasuries prompted investors to pocket profits after the benchmark 10-year JGB yield neared a seven-year low the previous day. JGBs were trading at 141.65 (-0.21) at 0637 BST. (RTRS)
BOJ policy board member Kamezaki expressed a cautious view on the country’s economy, saying it is not yet in a strong recovery led by domestic demand. He added that the central bank will make utmost efforts proactively for the economy to escape deflation, but gave no clues as to what policy steps are in store. He also said that Greek credit problem may indirectly affect Japanese economy. (RTRS)
China may have about CNY 500bln of new bank loans in July, according to a researcher with the Chinese Academy of Social Sciences. The nation may have about CNY 3trl of new loans in the second half, the researcher added. (Securities Daily)
Forex
Australia Consumer Prices (Q2) Q/Q 0.6% vs. Exp. 1.0% (Prev. 0.9%); Y/Y 3.1% vs. Exp. 3.4% (Prev. 2.9%) (RTRS)
New Zealand Business Confidence (Jul) M/M 32.4 vs. Prev. 38.5, third straight month fall (RTRS)
BOJ policy board member Kamezaki said that JPY rise vs. EUR will affect export competitiveness. (RTRS)
Bank of Canada’s Duguay says high level of monetary stimulus makes rate hike ‘almost inevitable’ (RTRS) Duguay says path of interest rates not preordained, says outlook has upside and downside risks. Says answers to G20 leaders on Basel bank capital reform are ‘very close’ and says it is important for banks to build capital in good times to help buffer shock in bad times.
Commodities
Oil fell for a second day overnight towards USD 77 a barrel after an unexpected increase in US crude stockpiles and a drop in US consumer confidence deepened doubts about recovery in energy demand. WTI crude futures were trading at USD 77.40, down USD 0.10, at 0637 BST. (RTRS)
US API Crude Oil Inventories W/W (Jul 23) 3084K vs. Prev. -241K US API Gasoline Inventories W/W (Jul 23) 877K vs. Prev. -412K
US API Distillate Inventory W/W (Jul 23) 407K vs. Prev. 979K US API Cushing Crude Inventory W/W (Jul 23) 465K vs. Prev. 586K (Sources)
RJ/CRB ends down 0.8% in biggest 1-day loss since July 12 as US consumer confidence falls. (RTRS)
Company News
Despite marginally better than expected CaseShiller data and decent earnings in the US, investor appetite for the riskier assets took a blow after consumer confidence data failed to match the Street estimate. However, keeping DJIA in positive territory was DuPont (+3.67%) after it posted strong earnings. The risk aversion tone saw the USD that strengthen and in turn weigh on the commodity products. As a consequence of the latest USD strength, WTI crude futures fell and tested USD 77. In turn, basic materials stocks in the S&P 500 were the worst performers.
UK
BG Group – Co.’s Q2 earnings for the period USD 899mln, and interim dividend of GBP 0.0982 per share. Co. continues to expect slight production growth for the full year. (RTRS)
British American Tobacco – Co.’s profit from operations GBP 2.271bln, and says shareholders should see another year of good growth in both earnings and dividends. (RTRS)
BAE Systems – Co. will sign defence deals with India’s HAL to supply 57 Hawk jet trainers, according to sources. (RTRS)
Centrica – Co.’s H1 adjusted operating profit GBP 1.56bln vs. Prev. GBP 945mln, and H1 adjusted EPS GBP 0.172 vs. Prev. GBP 0.105. (Sources)
Sage Group – Co. says trading is in line with expectations, however economic environment remains uncertain. (Sources)
Invensys – Co. continues to expect the group to deliver improved performance in the current year. (RTRS)
Rexam – Co.’s H1 net GBP 102mln, half year sales GBP 2.49bln. (RTRS)
Companies going Ex-Dividend: GlaxoSmithKline (GBP 0.1500), Investec (GBP 0.0800), Scottish & Southern Energy (GBP 0.4900
US
The latter half of the session saw little in terms of fresh news flow and little price action was observed. Finally, at the closing bell DJIA closed up 0.12% at 10537, S&P 500 closed down 0.10% at 1113 and NASDAQ 100 closed down 0.08% at 1888.
US Banks – Moody’s Investor Service said it changed the outlook to negative from stable on Bank of America, Citigroup and Wells Fargo. Moody’s reviews US regional banks’ supported ratings. Moody’s may cut BB&T, Capital One Financial, and Fifth Third Bancorp ratings. It may also cut Keycorp, PNC Financial Services, Popular, Regions Financial, Suntrust Banks, US Bancorp and Zions Bancorp ratings. (Sources/RTRS)
Broadcom – Q2 EPS USD 0.52 vs. Exp. USD 0.62, Q2 revenue USD 1.6bln vs. Exp. USD 1.59bln. Co. sees Q3 product gross margin flat from Q2 and sees Q3 revenue range of USD 1.7-1.8bln vs. Exp. USD 1.67bln. (Sources) Co. shares down 3.5% in after market trade.
Norfolk Southern – Q2 EPS USD 1.04 vs. Exp. USD 0.99, Q2 revenue USD 2.43bln vs. Exp. USD 2.40bln. Co. Q2 income from railway operations improved 57% to USD 733mln and says optimistic about continued Y/Y increases in rail traffic. Co. increases stock repurchase program and says repurchase of up to an additional 50mln shares of its common stock through Dec. 31, 2014. (Sources)
Cephalon – Q2 EPS USD 2.05 vs. Exp. USD 1.82, Q2 revenue USD 712.4mln vs. Exp. USD 699.68mln. Boosts forecast and sees year sales USD 2.63-2.71bln, sees Q3 revenue USD 670-700mln and sees Q3 adjusted EPS USD 1.80-1.90. (Sources)
AFLAC – Q2 EPS USD 1.35 vs. Exp. USD 1.33, Q2 revenue USD 5.0bln vs. Exp. USD 4.3bln. Co. sees Q3 operating EPS USD 1.35-1.38, sees FY EPS about USD 5.44 and expects Q3 sales to be lower than a year ago. (Sources)
CH Robinson – Q2 EPS USD 0.59 vs. Exp. USD 0.55, Q2 revenue USD 2.45bln vs. Exp. USD 2.31bln. (Sources)
Disney – Co. to acquire Playdom for USD 563.2mln. (Sources)
Europe
Deutsche Boerse – Q2 net income EUR 160.8mln, Q2 sales increased 9% to EUR 564.4mln and Q2 Ebit was EUR 257.4mln, up 3%. (Sources)
Infineon – Co.’s Q3 net income EUR 126mln vs. Exp. EUR 115mln, and Q3 sales EUR 1.2bln vs. Exp. EUR 1.1bln. Co. raises FY 2010 forecasts, and sees FY sales rising by 40%. (Sources)
Merck KGAA – Co. says FDA accepts filing for cladribine. The goal for completing a priority review is six months instead of the standard ten months. (RTRS)
Fresenius – H1 adjusted group net income increased by 23% to EUR 302mln vs. Exp. EUR 240mln. Says raises earnings outlook and expects net income to increase by 10-15% in constant currency in 2010. (Sources/RTRS)
Vinci – Q2 revenue EUR 8.97bln vs. EUR 8.19bln. Co. sees rising revenue in 2010, helped by acquisitions. (Sources)
Arcelormittal – Co.’s Q2 EBITDA USD 3bln vs. Exp. USD 2.94bln, and Q2 revenue USD 21.7bln vs. Prev. USD 15.2bln. Co.’s CFO says believe global steel market should grow by 10% in 2010, and still believe more likely that will see gradual recovery than double dip. (RTRS)
Air-France-KLM – Q1 net EUR 736mln vs. Exp. EUR 402mln, Q1 revenue EUR 5.72bln. (Sources)
EDF – French government says co. and Areva to sign strategic nuclear partnership, says partnership won’t be exclusive. Says co. to take leading role and Areva to carry out 15% capital increase by year end, also says co. may take stake in Areva. (Sources/RTRS)
Peugeot – Co.’s H1 net EUR 680mln vs. Exp. EUR 416.7mln, and H1 sales rose 21% to EUR 28.39bln. Co. sees recurring operating profit around EUR 1.5bln this year. Co. sees European market down 7% in 2010, but sees double digit growth in China. (Sources)
LVMH – H1 net EUR 1.05bln vs. Exp. EUR 956mln, H1 revenue EUR 9.1bln vs. EUR 7.81bln and H1 Ebit EUR 1.82bln vs. Exp. EUR 1.68bln. Co. CEO says not interested in L’Oreal. (Sources/RTRS) BBVA – Co.’s H1 net income EUR 2.53bln vs. Exp. EUR 2.47bln, and bad loans ratio 4.2% vs. 4.3% in March. (Sources)
ENI – Co. says Egypt will seek to secure rights for co. to gas transportation capacity in Arab gas pipeline system, says initiatives aim at foundation for developing Mediterranean gas hub in Egypt. (RTRS)
Portugal Telecom – Co. is about to sign a preliminary deal to take a 23% stake in Brazil’s phone company Oi, which would allow co. to sell its stake in Vivo to Telefonica. (O Jornal de Negocios)
Philips – Co. denied reports that it will sell one of its Chinese TV units to TPV Technology. (China Daily)
