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Global Equities Roundup: Market Talk

6 Mar 2017 2:07 am

0207 GMT - China's daily reserve cotton auctions -- due to start Monday -- will likely see some very strong initial uptake as mills have reportedly allowed their inventories to dwindle in anticipation of lower‑priced reserve cotton hitting the market, says Commonwealth Bank of Australia in a note. "We think though that there is more low‑grade cotton in those warehouses than anything else. So with high blend ratios for low quality cotton we wonder how quickly that domestic shortage gets resolved." China's National Development and Reform commission has said it will auction at least 30,000 tons of cotton every weekday until the end of August, totalling around 3.75 million metric tons. (lucy.craymer@wsj.com; @lucy_craymer)

0204 GMT - Shares of Singtel (Z74.SG) are outperforming an otherwise dull market in Singapore Monday morning, likely helped by expectations of higher revenue contributions from Indian associate Bharti Airtel (532454.BY). Bharti has entered into an agreement with Tigo Ghana Ltd. to combine their operations in Ghana and the business would service 10 million customers covering 80% of Ghana's population with a 3G network. Revenues are expected to be close to $300 million. Singtel owns 47.2% of Bharti Airtel. Singtel stock is up 0.4%. (venkat.pr@wsj.com)

0200 GMT - Singapore shares are trading flat in mixed trade Monday, as investors look for fresh cues as the earnings season comes to an end. The FTSE Straits Times Index is flat at 3126.88, with oil-related stocks leading gains and some banking stocks trading in the red. Rig builders Cosco Corp and Sembcorp Marine are up 6.2% and 1.5% respectively, while KrisEnergy is trading 1.6% higher. United Overseas Bank is down 0.5%, while DBS Group Holdings is 0.2% lower. (venkat.pr@wsj.com)

0149 GMT - Australian job advertisements fell 0.7% in February after January's strong 3.9% jump, though year-over-year growth was little changed at 6.9% and 7.1%, respectively, according to the report fro ANZ. The bank's head of Australian economics, David Plank, calls the sequential pullback expected given prior strength and may also reflect the seasonal-adjustment process. Unemployment has been stuck at around 5.8% the past year, and much of last year's employment growth occurred in part-time positions. Plank notes, "This is likely to weigh on wage growth and has the potential to delay the return of underlying inflation into the 2-3% target band beyond late next year." (james.glynn@wsj.com; @JamesGlynnWSJ)

0147 GMT [Dow Jones] Shares of Sumitomo Mitsui Financial Group (8316.TO) fall to a one-month low after the company said late Friday that its main banking unit, Sumitomo Mitsui Banking Corp, would sell shares in its parent--shares it had acquired during a 2012 group restructuring. The sale will increase the company's shareholders' equity. "Increasing its own capital isn't necessary for a company that has a sound financial footing," says Masayuki Kubota, chief strategist at Rakuten Securities. He says it would have been ideal if the company announced the share buyback simultaneously. The shares are down 2.6%, the biggest drop since November 9. (kosaku.narioka@wsj.com)

0140 GMT - A notable takeaway from Chinese Premier Li Keqiang's annual report to the National People's Congress was that the "exchange rate will be further liberalized and the currency's stable position in the global monetary system maintained," says Tim Condon, head of research for Asia at ING. The bank expects China to modify its market-based policy to let the yuan's trade-weighted index appreciate whenever the US Dollar Index rises. The yuan index measures the currency against a basket of 13 of China's major trading partners' currencies. Analysts say looking at the yuan versus a basket of currencies could help Beijing counter the perception of a falling unit versus the dollar. (kenan.machado@wsj.com)

0128 GMT - While Japan and South Korean equities are lower following the latest missile launch by North Korea, stocks in Asia are looking up. For both those markets, other factors are weighing--a rebound in the yen for Japan and continued pressure from restrictions on tourism to the country by China at week's end. Australia's S&P/ASX 200, meanwhile, is up 0.1% after some early softness, buoyed by commodity prices. Also, Hang Seng futures are up 0.3%. (ese.erheriene@wsj.com; @Ese_Journo)

0121 GMT [Dow Jones] Shares of Guangzhou Automobile Group (2238.HK) will likely head higher after disclosing another month of robust sales growth. The Chinese car maker sold 114,433 motor vehicles in February, a jump of 67% over the same month last year with year-to-date growth of 42%, thanks to hot demand for its SUVs. Sales, however, were down 32% from January, largely because the Lunar New Year holiday this year fell in February, and because the government has been phasing out a car tax incentive. Meanwhile, Credit Suisse still sees Guangzhou Automobile as one of the favorite picks of Chinese investors buying stocks in Hong Kong via the Connect trading link, given the stock also trades in Shanghai, but at a higher PE multiple. Guangzhou Automobile was down 0.9% on Friday at HK12.84. (john.wu@wsj.com)

0109 GMT - The earnings outlook for Australia's big banks is more finely balanced than their more optimistic share prices imply, Morgan Stanley says, adding that average earnings need to be about 13% higher to justify current price-earnings multiples. On the plus side, higher home prices and property investors have supported loan growth, and increases to mortgage rates have helped mitigate the impact of other margin pressures, MS says. The reflation trade has also boosted the banks' markets income, while loan losses have been limited by low interest rates and a rebound in commodity prices. A global disagreement on Basel IV measures has also delayed fresh capital requirements. But looking ahead, MS sees a number of challenges on the horizon, including an ongoing deposit-margin squeeze, a risk to loan growth from the mortgage-rate increases, tighter lending standards in the housing market, and weak income and employment trends. The investment bank remains neutral on the sector. (robb.stewart@wsj.com; Twitter: @RobbMStewart)

0056 GMT - Japanese stocks are down, led by financials, as enthusiasm wanes amid the prospects of a March rate increase in the US. Likelihood of that potential grew quickly last week, boosting government-bond yields and the dollar against the yen--which in turn helped financial and export stocks. Both industries are pulling back this morning, dropping some 1-2%, as the yen rebounds some amid North Korea's latest missile launch. Meanwhile, market participants are taking in stride China's slower economic-growth projection. The Nikkei is down 0.5% at 19366. (kosaku.narioka@wsj.com)

0046 GMT - Holding steady the past 2 weeks, China Vanke (2202.HK) shares could get a lift from robust February sales activity. The country's No. 2 property developer by 2016 revenue saw sales revenue more than double last month to CNY38.5 billion ($5.58 billion) as volume surged 97% to 2.4 million square meters. On top of a surprising January jump, both measures have roughly doubled from prior-year levels. Meanwhile, key rival China Evergrande (3333.HK) doubled its sales last month, putting the year's gain at 88%. Amid a fight for control that's now largely resolved between shareholders and management, Vanke's 2016 sales slightly trailed Evergrande. Vanke's stock is up 11% this year, versus Evergrande's 19% gain. (john.wu@wsj.com)

0023 GMT - While Credit Suisse last week crowed about the strongest earnings season in 7 years for Australia, Macquarie calls it solid but far from spectacular. The investment bank, which says earnings improved at a slower rate than anticipated, did come as profit beats outweighed misses while there were few signs of deterioration in earnings quality. But Macquarie also flags significant cuts to projected FY profit growth among industrials due to some hefty 1H misses. That as few new cost-cutting initiatives were announced. (robb.stewart@wsj.com; @RobbMStewart)

(END) Dow Jones Newswires

March 05, 2017 21:07 ET (02:07 GMT)

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