Article / 16 May 2017 at 7:00 GMT

Morning Markets: Asian shares wobble after rally, Nikkei nears 20,000

Consulting editor / TradingFloor
Norway







MM TABLE

 






Watchlist

  • Norway: GDP (published)
  • Hungary: Preliminary GDP (0700 GMT)
  • Netherlands: GDP first estimate (0730 GMT)
  • Italy: GDP preliminary estimate (0800 GMT)
  • UK: Monthly inflation figures, incl. CPI, core CPI, retail price index (0830 GMT)
  • UK: Producer prices (0830 GMT)
  • Germany: ZEW indicator of economic sentiment (0900 GMT)
  • EU: GDP flash estimate (0900 GMT)
  • Poland: Monetary policy meeting (0959 GMT)
  • US: Housing starts (1230 GMT)
  • US: Industrial production and capacity utilisation (1315 GMT)
  • US: API weekly statistical bulletin, incl. crude oil and gasoline stocks (2030 GMT)


Asian stock markets were helped on Tuesday by a higher close overnight for Wall Street, a softer yen, and firmer oil prices, but the region's shares retreated from their most ambitious gains by the afternoon.

Japan's Nikkei index approached 20,000 points for the first time in two years, climbing as high as 19,998.49 before easing back to end up 0.25% at 19,919.82 points. The Shanghai Composite climbed back into positive ground after a dip.

Oil's rally, which was sparked by verbal intervention at the weekend from Saudi Arabia and Russia, extended into Tuesday, with Brent crude hitting $52/barrel in Asian trading.

In Washington, President Donald Trump's political troubles are showing no sign of vanishing. He faces a new political outcry over reports that he had shared highly classified information in a White House meeting with Russian diplomats. The president's woes put the US dollar on the defensive.


Market signals

Asian session

  • New highs for Wall St indices, the Dax and FTSE100 gave Asian sentiment a lift
  • Prospect that Russia and Opec will extend output curbs is propping up crude prices
  • But rising US shale oil output will constrain any upward oil price momentum
  • The Nikkei 225 was up 0.11% to 19,891.98 at 0510 GMT after giving up some early gains
  • The Shanghai Composite recovered from a wobble in the late afternoon
  • Hong Kong's Hang Seng had hit its highest level since mid-2015
  • But it gave up some recent gains today; it was down 0.23% to 25,312.15 at 0530 GMT
  • S&P/ASX200 closed up 0.21% at 5,850.60
  • Underemployment may prompt the RBA to cut rates: RBA minutes
  • Australia's new motor vehicle sales rose 0.3% in April
  • The extortionist WannaCry attack has boosted shares in software security firms
  • North Korea may have set up WannaCry, opening up a cyber front in global tensions

Forex ahead

  • USD gave back some its gains against the yen; it was worth ¥113.5260 at 0529 GMT
  • AUD retreated, but it held above 0.74; it was worth 0.7422 at 0528 GMT
  • Global dairy trade auction on Wednesday could impact the NZ dollar

From the Floor

Defensive dollar. "The dollar is on the defensive," says Hardy.

Hot European stocks. "The headline today is that Europe is red hot,” says Garnry.


Get all the latest from Saxo Bank's trading floors in From the Floor, within the hour.

In opinion

1..2..3
The Brexit-driven slide in the pound is driving a pickup in UK inflation that comes at a tricky point in the business cycle for Britain, says James Picerno.

Infrastructure spending hopes
Excitement about plans for massive Belt and Road spending on infrastructure has dispelled worries about soft data from China, says the team at Saxo Capital Markets Australia

Oil-led bounce
Asian markets rose on the oil-price bounce that followed news Saudi Arabia and Russia had agreed to extend output cuts through to March 2018, writes Saxo's Singapore trading team.

Firmer GBP, weaker shares
If UK prime minister Theresa May wins a convincing election victory on June 8, sterling could gain, which would tend to cause short-term weakness in British equities, says Peter Garnry.

Volatility low
Gains in equities are pushing volatility to historic lows, but VIX call options are still expensive, so look for combination strategies to offset the premium, writes Georgio Stoev


Wooden shoe factory

 

GDP data are due from several EU countries, including 

wooden-shoe-producer Holland. Photo: Shutterstock

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