Market Snapshot
Asia: Japan +0.3% to 20725. Hong Kong +0.7% to 24552. China +2.3% to 3744. India -0.2% to 28236.
Europe: London flat. Paris -0.3%. Frankfurt -0.2%.
Futures: Dow -0.2%. S&P -0.2%. Nasdaq -0.2%. Crude -0.1% to $44.63. Gold flat at $1090.50.
Ten-year Treasury Yield flat at 2.23%
Economic News
8:30 Non-farm payrolls
3:00 PM Consumer Credit
Key earnings before the open
BAM, BCRX, BID, BR, CST, CVC, DOC, EBIX, ERF, GRPN, HIMX, HMSY, HRC, HRS, HSY, HZNP, JD, LMIA, LXRX, LXU, MGA, MHR, NILE, PMC, SFUN, SIRO, SJI, SSP, TC, TTI, TU, UAM, WWAV, ZINC
Key earnings after the close
BRK.B, IPAR, KRO
Markets
Investor’s focus will be on this morning’s U.S. non-farm payrolls report, which will be the first of two releases ahead of the Fed’s highly anticipated September policy decision. Most economists expect employers to have added more than 220,000 workers in July, matching June’s job gains, and providing further signs of an improving economy. The report, which is also expected to show an unchanged unemployment rate of 5.3%, will be released at 8:30 a.m. ET.
European shares are edging lower after an unexpected decrease in German industrial production, highlighting risks and raising questions about the strength of recovery in Europe’s largest economy. Coming in way below analyst expectations, output slumped by 1.4% in June, after rising a revised 0.2% in May. Exports fell 1%, while imports dropped 0.5%.
Germany’s Finance Ministry favors giving Greece another bridge loan in place of a “half-finished program” in order to give sufficient time to negotiate a comprehensive third bailout, Sueddeutsche Zeitung reports. Germany’s preference greatly contrasts with the view of Greek Prime Minister Alexis Tsipras and French President Francois Hollande, who said on Thursday a new bailout should be agreed upon by late August.
The Bank of Japan refrained from expanding monetary stimulus and maintained its upbeat assessment of the economy today, signaling a belief that inflation will hit its 2% target without additional support. As widely expected, the central bank will keep increasing its monetary base at an annual pace of ¥80T through purchases of government bonds and risky assets. The policy board made the decision by an 8-1 vote.
How much has Beijing pumped into its market? Peking University economist Christopher Balding has added up the bailout and stimulus measures announced since the Chinese equity panic in late June. They total $1.3T, or more than 10% of GDP. To put that in perspective, America’s Troubled Asset Relief Program was originally authorized to spend $700B. And that was a response to a systemic financial crisis in an economy some 70% bigger than China’s. Shanghai +2.3%; Shenzhen +2.7%; Chinext +3.9%.
Stocks
The first major float by a Chinese company since the stock market rout last month was met with a lukewarm reception today, as shares of China Railway Signal & Communication closed the day near their HK$6.30 IPO price. Typically, investors would chase new offerings higher, but since June, China-related shares have faced a souring of sentiment. With IPOs still banned in the mainland, many are wondering if more Chinese companies will list in Hong Kong.
After spending most of yesterday in the red, Planet Fitness (PLNT) ended its first trading session flat at its $16 IPO price. The disappointing debut came just a day after several poor trading starts. Amplify Snack Brands (BETR) and Sunrun (RUN) tumbled in their first day of trade on Wednesday, and didn’t fare any better in the following session.
Capital One is in exclusive talks to acquire General Electric’s (GE) U.S. healthcare finance unit, in a deal likely to top $10B, sources told Reuters. The potential deal could bulk up Capital One’s (COF) existing healthcare lending operations and bring GE another step closer to its target of shedding $200B worth of financial assets.
U.S. hospitals are now urging antitrust regulators to seriously debate Anthem’s (ANTM) planned acquisition of rival Cigna (CI). In a letter to the DOJ, the American Hospital Association said combining the country’s No. 1 and No. 5 health insurers would reduce competition in 817 geographic markets serving 45M consumers. Anthem announced the $47B plans just weeks after Aetna (AET) inked a deal with Humana (HUM), reducing the number of national insurers to three from five.
Tesla has released a clip of its Snakebot prototype – an autonomous car charger that’s capable of plugging itself in. “The video is just an example of some of the cool stuff we’re always working on behind the scenes,” Tesla (TSLA) told CNBC, but wouldn’t reveal when or if the prototype would be available for purchase. The device takes roughly 30 seconds to go from its upright position to connecting with the Model S.
Cybersecurity stocks were among the big decliners (HACK -2.7%) yesterday in a session where the Nasdaq drifted 1.6%. Equities that were hit hard included Palo Alto Networks (PANW -8.1%), Fortinet (FTNT -4.5%), AVG (AVG -8.1%), Proofpoint (PFPT -4.1%) and newly-public firm Rapid7 (RPD -5.7%). An afternoon report suggesting the Pentagon had been the victim of a “sophisticated cyberattack” launched by Russia did not do much to lift the group.
Three Coca-Cola bottlers have agreed to a merger combining $12B in revenue across 13 European countries, as part of a global consolidation push by Coke (KO) to cut costs amid slowing sales. Under the new tie-up, Coca-Cola Enterprises (CCE) would relocate its headquarters to the U.K., merging with Spanish and German operations to form “Coca-Cola European Partners”. The bottlers expect the move to generate annual cost savings of $350M-$375M within three years.
Alibaba has inked exclusive partnerships with more than 20 apparel brands including Zara and Timberland, under which its Tmall.com will be the only third-party online sales platform for the brands in China. Earlier this week Alibaba (BABA) picked former Goldman Sachs banker Michael Evans to lead its expansion outside of China, looking to attract popular American and European brands to list products on its site.
Carl Icahn is doubling down on energy after losing hundreds of millions in the sector this year amid the worst commodity price crash in a generation. The activist investor has reported a new 8.18% stake in Cheniere Energy (LNG) and plans to seek talks with management and perhaps board seats “if appropriate.” Icahn’s combined stake in the company now totals 19.4M shares.