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From the Floor: Buying the dip? — #SaxoStrats

   • Nikkei futures jump sharply as traders buy the dip
   • UK car sales drop by 12.9% year-on-year
   • EURUSD rally not supported by other USD pairs
   • 'Not much to celebrate' in Aussie jobs report: Garnry
   • Tencent shares jump 2% on earnings, quant model negative

By Michael McKenna

US stocks were led lower Wednesday by falling commodity prices, but APAC investors stepped in overnight to halt the Nikkei's decline with the benchmark index rising by 1.47%.

"It appears as if traders are buying the dip in world equities," says Saxo bank head of equity strategy peter Garnry, adding that the Nikkei rebounds comes hot on the heels of a week of declines that briefly took the Japanese benchmark south of the 22,000 level.

The Nikkei 225 closed at 22,351.12 today.

In single shares, Garnry reports that Tencent rose by 2% on an earnings release that showed a 62% year-on-year growth in revenues. Despite the figures, however, Garnry says that Saxo's quant model remains negative Tencent as momentum is currently the only positive measure for the stock.

Nikkei 225 (hourly):
Nikkei 225

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Source: Saxo Bank 

In forex markets, Saxo bank head of FX strategy John J Hardy tells us that the EURUSD rally remains technically robust despite not seeing any real support from other major dollar pairs.

In AUD, Hardy says that the jobs report released overnight may have showed a decline in the overall jobless rate, but adds that a concurrent fall in the participation rate means that there is ultimately "little to celebrate" for Aussie longs.

Saxo's FX chief adds that we have a panoply of central bank speakers out today with officials from Norges Bank, the Swedish Riksbank, the European Central bank, and the Federal reserve all out with uopdates.

Finally, Peter Garnry points to Brexit deadlock as one of the potential factors behind a 12.9% year-on-year drop in UK car sales as uncertainty infects the british economy; EU sales for the same period rose 5.9%.

For more on central banks, Asian equities, and Cerberus' plans following its acquisition of stakes in Commerzbank and Deutsche Bank, watch today's Morning Call via the link above.

Nikkei 225
 Land of the rising shares. Photo: Shutterstock

Michael McKenna is senior editor at Saxo Bank


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