Morning Report APAC: Crude retreats, gold rides a roller coaster

• There was a welcome drop in Initial Jobless Claims in the US
  
• Gold had a roller-coaster day on Thursday amid the US dollar rebound
  
• Copper is consolidating after the red metal's strong rise a week ago
• Oil retreated amid rising US output, and aggressive shale oil production targets
  

By Saxo APAC Sales Trading

Economic data of the day (Singapore Time)

Speeches (Singapore Time)

• 0930 – Australia: Release of Reserve Bank of Australia statement on monetary policy.
  

Overnight news, US

• Initial Jobless Claims dropped 5,000 to just 240,000. The four-week moving average of claims, which smooths out volatility, fell 2,500 to 241,750.
• Factory goods orders jumped 3% as expected. Thursday's report from the Commerce Department also showed orders for non-defence capital goods excluding aircraft - seen as a measure of business spending plans - were unchanged in June instead of slipping 0.1% as reported last month.
  
• In June, orders for machinery increased 0.4% after advancing 2.6% in May. Mining, oil field and gas field machinery orders increased 3.8% after accelerating 10.3% in May.
• ISM Non-Manufacturing Composite dropped to 53.9 from 57.4 (Exp. 56.9)

Overnight news, Washington

• Special Counsel Robert Mueller has impaneled a grand jury in Washington to investigate Russian interference in the 2016 presidential election, a sign that his inquiry is growing in intensity and entering a new phase

Overnight news, UK

• The Bank of England left its benchmark interest rate unchanged at 0.25%. 
• BoE governor Mark Carney said Brexit is casting the biggest shadow over the U.K.’s economic outlook, as his confidence in an orderly departure from the European Union starts to fade. “The assumption of a smooth transition to a new economic relationship with the EU will be tested”
• Inflation, at 2.6% in June, is above the BoE’s 2% target.
• The central bank now projects economic growth of 1.7% this year and 1.6% in 2018, down from 1.9% and 1.7%. The downgrades were enough for the majority of the Monetary Policy Committee to keep their cautious stance, with the vote for no change coming in as expected at 6-2.

Foreign exchange

• The USD was fairly stable overnight with the main mover being only GBP after Carney’s comments.
• With the dovish comments from Mark Carney and less chance of a hike in the UK, we should see more selling interest coming in GBP, but 1.3000 will be the strong support level. There will be room though to see GBP move higher if the USD selloff continues, or if any positive news comes out of the Brexit negotiations.
• Emerging Markets: USD unchanged overnight. The main mover yesterday was USDKRW higher on the back of a selloff in Korea's Kospi Composite, but sellers re-emerged in the New York trading session.

Foreign exchange movements

• There is some demand in EUR crosses upside from 3 weeks to 2 months maturity.
• With the spot sitting at 0.8000, the risk/reward outlook for lower AUD seems very good, and Funds are punting a move lower through options.

Rates

• US Treasuries ended on highs, led by long-end of the curve, with yields lower by 2.5 basis points to 6 bp across the curve as dollar slid on Wall Street Journal report that Mueller said to impanel grand jury on Russia.
• European government bonds advanced led by long-end following wider gains in gilts following dovish Bank of England choosing to keep interest rates unchanged.
  

Commodities 

Equities

• Dow industrials on Thursday logged a seventh consecutive all-time high, but the broader market closed lower after a volatile session as being dragged down by the energy sector.
• Kellogg Co. 4.3% after delivering better-than-expected second-quarter results as the Corn Flakes maker's cost-cutting efforts paid off and had completed the overhaul of the distribution model for its US snack business earlier than expected. Net income was 80 cents per share, up from $0.79 per share, for the same period last year. Adjusted earnings-per-share was $0.97, beating the 92-cent consensus.
• Teva Pharmaceutical Industries Ltd plummeted nearly 18% after missing fiscal second-quarter profit expectations, earnings per share of $1.02 was $0.04 below what analysts surveyed by Reuters expected, on weaker-than-expected performance in its U.S. generics business, among other factors and slashed its full-year outlook.
• Fitbit Inc. surged 15.1% after the fitness-tracking device maker reported results late Wednesday and news that the company’s smartwatch will hit stores soon.
• European equities finished slightly higher, lifted by Next PLC, which rallied 9.7% after the UK clothing and home-furnishings retailer returned to sales growth in Q2 boosted by improved product ranges and a better online offer and raised the lower end of its full-year sales guidance.

Asian equities preview

Hong Kong analyst views

• CK Property (1113 HK): Raised to Outperform at Credit Suisse, price target $HK75.30
• Hengan Int’l (1044 HK): Raised to Buy at BOC Intl, PT $HK69
• Sunny Optical (2382 HK): New Hold at China Renaissance, PT $HK76
• Wanhua Chem Group (600309 CH): New Buy at Sealand Securities
• Zhejiang Crystal-Optech (002273 CH): New Buy at China Renaissance, PT 34 Yuan

Hong Kong stocks

• Technology sector: China’s Mid-Tech Firms Face Being ‘Washed Away’ by Lending Purge.
• China Aoyuan (3883 HK): China Aoyuan Unaudited July Contract Sales Rise 107% Y/y.
• China Evergrande (3333 HK): China Evergrande July Contracted Sales 44.2bn Yuan.
• CK Hutchison (1 HK): Li Ka-shing’s CK Hutchison Posts 7% Increase in Half-Year Profit.
• CK Property (1113 HK): CK Property First Half Underlying Profit Rises 14% on Year.
• China Life (2628 HK): H.K. SFC Publicly Censures China Life Insurance for Breaches
• .
• China Resources Land (1109 HK): China Resources Land Signs $HK11bn 5Y Club Loan with 8 Banks.
• China Shenhua (1088 HK): China Shenhua Sees 3.03bn Yuan Net Fall From Output Reduction.
• China State Const (601668 CH): China Construction Plans to Invest at Least 100b Yuan in Shanxi.
• China Vanke (2202 HK): GLP $4.65b Buyout Loan Seeks Minimum Tickets of $200m-$300mln.
• Fosun Int’l (656 HK): Fosun JV Completes Purchase of German Automotive Supplier Koller.
• Greentown China (3900 HK): Green China Says Property Sales Reach 8.8b Yuan in July.
• HSBC (5 HK): HSBC Bought Back 2.14m Shares at Avg 758.86 Pence Each Aug. 3.
• MGM China (2282 HK): MGM China First Half Revenue $HK7.39bn.
• Standard Chartered (2888 HK): StanChart Names Andersen, Duffy Co-Heads Fincl Markets Americas.
• Standard Chartered (2888 HK): StanChart CFO Says People Move to Frankfurt to Be ‘In the Tens’.
• Times Property (1233 HK): Times Property Says July Contracted Sales 3.1bn Yuan.
• Wintime Energy (600157 CH): Leshi Investment to Invest 435m Yuan in Belt, Road Insurance Co.

Japan analyst views

• Adastria (2685): downgraded to neutral at Goldman; price target cut to ¥2,800.
• Mitsubishi Corp (8058): raised to buy at Nomura, PT ¥3,250.
• Niitaka (4465): new outperform at Iwai Cosmo, PT ¥2,180.

Japan stocks

• Asahi Group (2502): Raises full-year operating profit forecast 15% to ¥167.3bn.
• Calbee (2229): Q1 operating profit falls 52% y/y to ¥3.4bn.
• Chiba Bank (8331): To buy back as much as 1.25% of shares for ¥7bn; Q1 net income falls 7.8% y/y to ¥17.0bn.
• Concordia Financial (7186): Q1 net income drops 74% y/y to ¥19.5bn.
• Daicel (4202): Plans to buy back 2.17% of shares for ¥10bn, registers to sell up to ¥50bn of bonds; Company reports 8.2% y/y drop in Q1 operating profit to ¥15.8bn.
• Disco (6146): Raises first-half operating profit forecast 22% to ¥26bn.
• Gree (3632): Forecasts return to quarterly profit with 1b yen in net income for Q1 of new fiscal year.
• Gunze (3002): Swings to Q1 net profit of 1.7b yen from ¥5.7bn loss a year earlier.
• Hankyu Hanshin (9042): Q1 operating profit +16% y/y to ¥33.3bn.
• Hokuhoku Financial (8377): Q1 net income +6.2% y/y to ¥7.3bn.
• Itochu Techno (4739): Q1 operating profit +38% y/y to ¥2.7bn.
• Kirin (2503): Lifts full-year operating profit outlook by 4.1% to 152b yen as H1 operating profit rises 36%.
• Kubota (6326): Q2 operating profit +27% y/y to ¥61.3bn, beating analyst estimate for just ¥54.1bn.
• Lion (4912): Half-year operating profit +13% y/y to ¥11.8bn.
• Mitsui Fudosan (8801): Q1 operating profit +8.8% y/y to ¥51.8bn, while net income -1.1% y/y to ¥33.9bn.
• Nagase (8012): Q1 operating profit +59% y/y to ¥5.6bn.
• Nikon (7731): Raises first-half net income target to ¥13bn from ¥6bn.
• Nippon Yusen (9101): Convicted of cartel conduct in Australian Federal Court and fined $A25mln.
• NTT Data (9613): Q1 operating profit +28% y/y to ¥22.2bn while net income slides 19% y/y to ¥8.1bn.
• NTT Urban Development (8933): Q1 operating profit +78% y/y to ¥9.3bn.
• Sapporo (2501): Buys Anchor Brewing for $85mln in craft beer push; Half-year operating profit slips 1% y/y to ¥3.0bn, net income falls 52% to ¥222mln.
• Sega Sammy (6460): Q1 net income nearly triples y/y to ¥11.5bn.
• Seibu Holdings (9024): Q1 operating profit +47% y/y to ¥17.0bn, while net income slides 19% to ¥10.2bn.
• Seven & i Holdings (3382): To transfer Sogo Kobe and Seibu Takatsuki stores to H2O Group
• Showa Sangyo (2004): Q1 operating profit falls 30% y/y to ¥1.9bn.
• Suzuki Motor (7269): Q1 operating profit +44% y/y to 85.1b yen
• Terumo (4543): Q1 operating profit at 23.4b yen, exceeding analyst estimate for ¥21.5bn.
• Tokyo Broadcasting System (9401): Q1 operating profit +25% y/y to ¥6.6bn.
• Tokyo Ohka Kogyo (4186): Q1 operating profit +21% y/y to ¥2.8bn.
• Toshiba (6502): Western Digital says California court denied a legal stay that enabled Toshiba to cut off some WD employees’ access to databases at a JV between the two companies.
• Tsumura (4540): Q1 operating profit slips 1.1% y/y to ¥4.4bn, net income +8.2% y/y to ¥3.2bn.
• Yamada Denki (9831): To buy back as much as 4.97% of shares for ¥20bn;  Q1 operating profit slides 20% y/y, while net income more than doubles.

Australia analyst views

• API: Australian Pharma Industries Raised to Buy at Bell Potter.
• SUN: Suncorp Cut to Underperform at APP Securities, price target $A13.94; Cut to Neutral from Buy at Goldman Sachs.
• WEB: Webjet Raised to Add at Morgans Financial, PT $A13.50.

Australia stocks

• AQG: Alacer Gold Short-Interest Ratio Rises 17% to 8 Days.
• CBA: CBA Sued for Alleged Money Laundering Breaches.
• CWN: Crown Resorts FY earnings.
• CROP WEATHER:
  
• PEP: KKR considers equity carrot to lure Pepper top dogs: AFR.
• TAH: Tabcorp to release full-year earnings
• Weather: More Rains Seen in Northern Europe; likely to affect Australian agricultural sector.
  

 

– Edited by Robert Ryan

This report was compiled by the Saxo APAC Sales trading team in Singapore – the home of social trading. Follow the team on @SaxoStrats or post your comment below to engage with Saxo Bank's social trading platform. Follow us on @SaxoStrats on Twitter

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