Article / 07 September 2017 at 2:51 GMT

Morning Report APAC: Asia buoyed by US debt deal

APAC Sales Trading Desk / Saxo Capital Markets
Singapore

 

  • Asian stocks rise as investors support deal that keeps US government funded
  • Most Asian markets up, including Hang Seng, KOSPI and Topix
  • JPY was steady at 109.13 to the USD after falling 0.4% on Wednesday

By Saxo APAC Sales Trading


Economic data of the day (Singapore Time)
xxx

 


Speeches

0015 – US: Fed’s Mester speaks on economic outlook and monetary policy
0700 – US: Fed’s Dudley speaks on US economic outlook and Monetary policy
0815 – US: Fed’s George speaks on economic outlook

Overnight news

 US: The Congress has finally agreed for a Debt Ceiling extension for three months as part of aid for Hurricane Harvey. Some Republicans wanted a longer deal.
 
North Korea:
A US-drafted resolution seeks to have the UN ban all oil and natural gas exports to North Korea and order a freeze on all foreign financial assets of the country and its leader Kim Jong Un. The draft circulated to council members Wednesday was obtained by The Associated Press. It would also prohibit North Korea from exporting textiles and ban all countries from hiring and paying workers from the northeast Asian nation - two key sources of foreign currency. It would also prohibit North Korea from being part of any joint ventures or cooperative agreements. The resolution is likely to face opposition from China and Russia
 
Federal Reserve:
Stanley Fischer resigned as Fed vice chairman, effective mid-October, enabling Trump to remake the central bank leadership before Janet Yellen's term ends in February. Gary Cohn probably won't replace her, the WSJ reported. The former Goldman exec has fallen out of favor since criticizing the president's response to white supremacists. Fischer was set to remain until June 2018, and his exit leaves four of the seven seats on the Fed board vacant.

Canada: The  Bank of Canada surprisingly raised the Overnight Lending Rate by 25 basis points to 1.00%. At the same time, BOC cited risks including continued excess capacity, subdued wage and price pressures, geopolitics and the higher CAD along with concern about the impact of rising interest rates on indebted households.

“Future monetary policy decisions are not predetermined and will be guided by incoming economic data and financial market developments as they inform the outlook for inflation,” the Bank of Canada said Wednesday in a statement from Ottawa.
 
Brazil:
BCB cut the Selic Rate by 100 bps to 8.25% as expected. 


Foreign exchange

xxx

 














USD rallied slightly following the US rates after the Debt Ceiling agreement was reached. The market was overall mixed though overnight. Around 92.0 remains the level to watch for DXY.

EURUSD trades just at the resistance level of 1.2000 before the ECB meeting today. We have seen some interest to buy downside options in EUR ahead of the meeting but the main risk is Draghi talking down the EUR move and seeing another big squeeze higher. 

USDCAD dropped 1.20% following the surprising rate decision. The market seems very short USDCAD even though the pair moved 12% since May. With the rate hike, there is not many reasons to go against the trend, even at this level. There is support before 1.2000.

Emerging Markets: USDKRW has cooled down a lot since the 1% rally following after the nuclear  test from North Korea. USDBRL dropped 0.5% following the rate cut and we expect more foreign bond inflows into the country with probably more cuts to come from the central bank.

Foreign exchange movements

xxx
Funds have been buying a lot of ATM and topside AUDUSD and they have realised the pair has been has been underperforming the past two months so banks have been caught selling too much volatility and we are seeing a squeeze higher in movements in AUD.

The whole curve trades higher in USDCAD with the market on the December monetary policy meeting.

Rates
xxx

 
US yields were higher after US congress extended the debt limit through December, and partially supported by good data in service industries. However, market’s expectation of rate hike amid low inflation environment has dropped below 30%.

The bunds yield was higher amid risk off bull flattening, peripherals spread widening mostly due to supply flooding ahead of auctions.

Commodities 

 xxx

 





























 



Equities
xxx

 














US stock benchmarks closed moderately higher as lifted by energy stocks and after Trump and Democrats agreed to a three-month extension of the US debt ceiling, while concerns over North Korea, Category 5 Hurricane Irma kept a cautious tone.

Gap Inc surged 7.5% after the company said it expects its Old Navy brand to reach $10 billion in sales over the next few years, while speaking at the Goldman Sachs Global Retailing Conference. Macy’s Inc. and Kohl’s Corp were also sharply higher, up 5.5%, and 4.9% respectively.

Hewlett Packard Enterprise Co. dropped 1.9% despite as the company late Tuesday reported earnings that beat forecasts after the spinoff of some software assets.

Cruise line operators, such as Carnival Corp., Royal Caribbean Cruises Ltd. and Norwegian Cruise Line Holdings Ltd. managed to find some support from previous day’s slump due to Cat. 5 Irma may threaten more cancellations and changes.

Insurance firms were dragged down as Hurricane Irma in focus as Stoxx Europe 600 Insurance Index dropped 0.4%, as shares of Swiss insurer Zurich Insurance Group AG fell 0.7%, Swiss Re AG closed 0.9% lower, while AXA SA gave up 0.5%.

Asia Pacific Stocks
 
Hong Kong

 
Analyst ratings:
 
-          Air China (601111 CH): A Shares Raised to Neutral at JPMorgan, PT 9.40 Yuan
-          China Resources Beer (291 HK): New Buy at China Securities, PT HK$24.30
-          China Shenhua (1088 HK): H Shares Cut to Sell at Haitong Intl, PT HK$15.60
-          China Southern Air (1055 HK): H Shares Cut to Underweight at JPMorgan
-          CRRC Times (3898 HK): H Shares Raised to Market Perform at Bernstein
-          Shenzhou Int’l (2313 HK): Cut to Hold at HSBC, PT HK$64.30
-          Tsingtao Brewery (600600 CH): H Shares New Hold at China Securities
-          Wolong Electric (600580 CH): New Outperform at SWS
-          Zoomlion (000157 CH): A Shares Cut to Underperform at Bernstein, PT 3.60 Yuan
 
Preview:
-          China Comm Cons (1800 HK): Signs Pact for 70.8B Yuan PPP Projects
-          CK Hutchison (1 HK): Priced: Hutchison Port $500m 5Y Bond at +117.5bp
-          Geely Auto (175 HK): Aug. Sales Volume 96,505 Units, up 6% on Month
-          HNA Unit HKICIM (687 HK): Says to Scale Back Investment in a Fund to $77M
-          HKEX (388 HK): HKEX Jan.-Aug. Sec. Market Avg Daily Turnover Rises 20% on Year
-          Huawei To Tie up With AI Firm Afiniti for European Market Push
-          Kangde Xin (002450 CH): Kangde Xin, Samsung Electronics to Cooperate on Glasses-Free 3D
-          Ping An Insurance (2318 HK): Ping An Insurance Unveils First Two Insurance Fintech Products
-          Shanghai Fosun Pharma (600196 CH): Palatin in Pact with Fosun Pharma for Bremelanotide
-          Shanghai Oriental Pearl Media (600637 CH): Shanghai Oriental Pearl, Lenovo to Cooperate on Big Data, AI
-          Shenzhen Kaizhong (002823 CH): Makes Binding Offer to Buy Pacific Insight
-          Shenzhou Int’l (2313 HK): Shenzhou International Holders Seek Up to $425m in Block: Terms
-          Yuzhou Properties (1628 HK): to Raise HK$1.59B From Top-Up Placement

Japan
 
Analyst Ratings:
 
-          Asahi Kasei (3407): Cut to neutral from buy at UBS
-          Eisai (4523): Raised to neutral from underperform at Credit Suisse
-          Nissan (7201): French govt. stake in Renault no concern if autonomy respecteed, CEO says
-          NTN (6472): Cut to underweight from neutral at JPMorgan
-          Sanyo Steel (5481): Cut to neutral from buy at Haitong
-          Shinko Electric (6967): Cut to underweight from equalweight at Morgan Stanley MUFG
-          Ube Industries (4208): Cut to neutral from neutral plus at Iwai Cosmo

Preview:
-          McDonald’s Holdings Co Japan (2702): Aug. same-store sales +15% y/y
-          Mitsubishi Tanabe (4508): Signs pact with Option Care Enterprises to become national provider of home infusion services for Radicava for ALS
-          Mitsui High-Tec (6966): 1H operating profit 1.26b yen vs co. target 1b yen; to invest 7b yen to build motor core plant
-          Skylark Co (3197): Aug. same-store sales +0.6% y/y
-          Tokio Marine Holdings (8766): To set up new insurance company in Luxembourg

Australia
 
Analyst Ratings:
 
-          BHP AU: BHP Cut to Underperform at Exane, PT GBP13.10
-          CBA AU: Commonwealth Bank Raised to Buy at Morningstar
-          ORE AU: Orocobre Raised to Buy at Cormark, PT C$5.60
-          RCR AU: RCR Tomlinson New Overweight at JPMorgan, PT A$5.08
-          TLS AU: Telstra Raised to Outperform at Credit Suisse, PT A$4
-          VRT AU: Virtus Health Raised to Buy at Morningstar
Preview:
-          BLY AU: Boart Longyear Affirmed by Moody’s, Outlook Negative
-          RIO AU: Rio CEO Remains Patient on Future of World’s No. 2 Copper Mine
-          SIG AU: Sigma Pharma 1H Earnings
-          TGH NZ: Tegel Forecasts Underlying Ebitda Will Rise in FY2018

xxx
 Trump's deal with the Democrats has maintained stability across markets. Photo: Shutterstock


– Edited by Adam Courtenay


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

All material contained herein is provided for your general information. The information and commentaries are not intended to be and do not constitute financial advice, investment advice, trading advice or any other advice or recommendation of any sort offered or endorsed by Saxo Capital Markets Pte. Ltd. (“SCM SG”). Any expression of opinion (which may be subject to change without notice) is personal to the presenter and/or author; they do not reflect the view or opinion of SCM SG or its affiliates, neither do they constitute an endorsement of SCM SG’s view or analysis of the same.

None of the information contained here constitutes an offer to purchase or sell a financial instrument, or to make any investments. SCM SG does not take into account your personal investment objectives or financial situation and makes no representation and assumes no liability as to the accuracy or completeness of the information nor for any loss arising from any investment based on any commentaries or information provided here.
For further information, please click here.  


Saxo Capital Markets Pte Ltd ("Saxo Capital Markets") is a licensed subsidiary of Saxo Bank A/S, an online trading and investment specialist. Saxo Capital Markets serves as the APAC headquarters and holds a capital markets services licence under the Monetary Authority of Singapore; and a commodity broker licence issued by the International Enterprise Singapore. Clients can trade Forex, CFDs, Stocks, Futures, Options and other derivatives via SaxoWebTrader and SaxoTrader, the leading multi-asset online trading platforms.
Trading risks are magnified by leverage - losses can exceed your deposits. Trade only after you have acknowledged and accepted the risks. You should carefully consider whether trading in leveraged products is appropriate for you based on your financial circumstances. Please consider our Risk Warning and General Business Terms before trading with us. Please see full General Disclaimer.

Thousands of serious traders receive free news and analysis from Saxo Capital Markets each day. Saxo Capital Markets never sends these emails unsolicited; they are sent following acceptance of your membership and subscription request by Saxo Capital Markets at saxomarkets.com.sg. If you do not wish to receive any emails from Saxo Capital Markets in the future, please reply to this email with the word "UNSUBSCRIBE" in the subject header.

Copyright | Disclaimer | Risk Warning | Privacy Policy | Contact Us
Samsung Hub | 3 Church Street | # 30-01 | Singapore 049483
Company No. 200601141M

Disclaimer

The Saxo Bank Group entities each provide execution-only service and access to Tradingfloor.com permitting a person to view and/or use content available on or via the website is not intended to and does not change or expand on this. Such access and use are at all times subject to (i) The Terms of Use; (ii) Full Disclaimer; (iii) The Risk Warning; (iv) the Rules of Engagement and (v) Notices applying to Tradingfloor.com and/or its content in addition (where relevant) to the terms governing the use of hyperlinks on the website of a member of the Saxo Bank Group by which access to Tradingfloor.com is gained. Such content is therefore provided as no more than information. In particular no advice is intended to be provided or to be relied on as provided nor endorsed by any Saxo Bank Group entity; nor is it to be construed as solicitation or an incentive provided to subscribe for or sell or purchase any financial instrument. All trading or investments you make must be pursuant to your own unprompted and informed self-directed decision. As such no Saxo Bank Group entity will have or be liable for any losses that you may sustain as a result of any investment decision made in reliance on information which is available on Tradingfloor.com or as a result of the use of the Tradingfloor.com. Orders given and trades effected are deemed intended to be given or effected for the account of the customer with the Saxo Bank Group entity operating in the jurisdiction in which the customer resides and/or with whom the customer opened and maintains his/her trading account. When trading through Tradingfloor.com your contracting Saxo Bank Group entity will be the counterparty to any trading entered into by you. Tradingfloor.com does not contain (and should not be construed as containing) financial, investment, tax or trading advice or advice of any sort offered, recommended or endorsed by Saxo Bank Group and should not be construed as a record of ourtrading prices, or as an offer, incentive or solicitation for the subscription, sale or purchase in any financial instrument. To the extent that any content is construed as investment research, you must note and accept that the content was not intended to and has not been prepared in accordance with legal requirements designed to promote the independence of investment research and as such, would be considered as a marketing communication under relevant laws. Please read our disclaimers:
- Notification on Non-Independent Invetment Research
- Full disclaimer

Check your inbox for a mail from us to fully activate your profile. No mail? Have us re-send your verification mail