CONSUMER CYCLICALS: Pandora: tariff impact
(Baa2/BBB) (Equities -13%)
• Thailand has been hit by a 36% tariff (main supply chain exposure) and Vietnam by 46% (smaller secondary exposure).
• US is 30% of sales and it said in Feb a 10% tariff on Thailand would see DKK350-400m impact (4.3-5% of last yrs EBIT) or tad more than 100bps on margin. On above 36% we see a 17% earnings hit.
• Pandora is a firm credit name (was our lowest beta pick in retailers) and runs impressive 80% gross and 25% EBIT margins. On a -15% EBITDA hit we see n/g leverage moving from 1.1x/1.3x to 1.3x/1.5x (+0.2x).
• This would still leave it within its target range of net 0.5x-1.5x and below both S&P downgrade threshold (>net 1.5x) and Moody's (>gross 2.0x). We have always seen ratings as harsh for financials (penalised for single brand exposure).
It was guiding to +7-8% organic growth this year after stellar double digit growth last year and was flagging a -70bp headwind from the rise in silver prices last year. Silver has held onto those higher levels {XAG Curncy} (silver is 30% of costs and is 70% hedged over 1yr forward period) - but its FY26 EBIT margin target of 26-27% (vs. 24.5% expected this year) is valid on a $30/ounce.
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USD: A mixed session in G10s going into the European session
- Aside from the known Volatile Yen, the USDJPY already trades in a 105 pips range overnight, the Dollar was mostly flat Overnight against G10s.
- The Aussie was the worst early performer as Tariffs came into effect, the Overnight printed low in AUDUSD was the lowest in a Month, since 4th February, but has now recovered 20 pips off the low to trade at mid range going into the Europe session despite the Risk tilted to the downside.
- The Yen is still the best performer, up 0.25%, but trades right in the middle of the 148.60/149.65 (low/High) range at 149.14.
GOLD TECHS: Support At The 50-Day Remains Intact For Now
- RES 4: $3000.0 - Psychological round number
- RES 3: $2976.8 - 2.0% 10-dma envelope
- RES 2: $2962.2 - 2.00 proj of the Nov 14 - Dec 12 - 19 price swing
- RES 1: $2920.8/2956.2 - High Feb 27 / 24 and the bull trigger
- PRICE: $2894.2 @ 07:24 GMT Mar 4
- SUP 1: $2832.7 - Low Feb 28
- SUP 2: $2808.1 - 50-day EMA
- SUP 3: $2758.3 - Low Jan 30
- SUP 4: $2730.6 - Low Jan 27
The latest pullback in Gold appears to be a correction. The move through the 20-day EMA does signal scope for an extension towards the next important support around the 50-day EMA, at $2808.08. However, Monday’s gains are a positive development and potentially an early reversal signal. A stronger rally would refocus attention on the next objective at $2962.2, a Fibonacci projection. This would also open the $3000.0 handle.
BUNDS: Trump Tariiffs come into effect
- A busy and wide traded session for Bund, after Trump's Tariffs on Canada, Mexico, China came into effect, but most was already priced in by the Markets, so the German contract trades well within Yesterday's wide range.
- Canada has announced a 25% tariff plan on some US Exported products, {ch} China delivered a more pinpoint set of Tariffs, targeting US Farmers with a 10%-15% on Agricultural products, although the lower response could suggest China's willingness to negotiate.
- The Volume in Bund is elevated for this Time of the day, but worth noting that 90% of that Volume is spread related, as Desks pick up the pace rolling March Positions into June.
- Support in Bund (March) is seen at 132.10 followed by 131.79. Resistance is at the 133.29 gap.
- There are no Tier 1 Data for the session, these pick up again Tomorrow.
- SUPPLY: UK £2.25bn 2054 (Equates to 33.6k Gilt) will weigh, German €4.5bn Bobl (equates to 42.8k Bobl) will weigh. and Netherland new 10-year 2.50% Jul-35 DSL.
- SYNDICATION: Belgium 15yr.
- SPEAKERS: Fed Williams.
