Article / 13 September 2017 at 2:11 GMT

Morning Report APAC: Asia continues US equities surge

APAC Sales Trading Desk / Saxo Capital Markets


  • Asan equities are extending the highs begun over night in the US
  • Benchmarks advanced in Tokyo and Sydney in early trading
  • USD holds onto gains ahead of US inflation data later this week
  • USDJPY traded at 110.18 after sliding 0.7% on Tuesday

By Saxo APAC Sales Trading

Economic data of the day (Singapore Time)




0100: EC – ECB executive board member Praet speaks in Frankfurt

0715: AU – RBA’s Debelle gives remarks in Sydney

Overnight news

UK: UK inflation is on the rise again, accelerating more than forecast in August after the biggest surge in clothes prices in almost three decades. CPI rose from -0.1% to +0.6% MoM (Exp. 0.5%) and 2.9% from 2.6% (Exp. 2.8%). PPI rose to 0.4% MoM (Exp. 0.1%) and 3.4% YoY (Exp. 0.1%).

The inflation pickup in August was led by clothing and footwear, which surged 4.6 percent compared with a year earlier.

The Bank of England is meeting on September 14 and the market is pricing an 88.8% chance of No Change in the rates due to GDP still depressed at +0.3% quarter on quarter.
Expensive birthday present: Apple rolled out its much-anticipated iPhone X, a redesigned product of glass and stainless steel with an edge-to-edge display that CEOTim Cook called “the biggest leap forward since the original iPhone”.

The phone features wireless charging, an infrared camera and hardware for facial recognition, which replaces the fingerprint sensor for unlocking the phone. The home button found on previous iPhones is also gone, and users instead tap the device to wake it up.

The phone, which is priced at $999 and ships on November 3, as well as the holiday shopping season that follows are the most important for Apple in years.

The new phone’s ship date raised questions about possible supply constraints ahead of the holidays. The share price dropped 0.4%.

Foreign exchange



Equities continue to rally, as well as US rates pushing lower the safe heaven currencies like JPY and CHF. The pain trade in GBP continues.

DXY was fairly muted overnight due to GBP rallying almost 1% after then inflation data. The resistance remains at 92.00

GBPUSD has rallied 1% after the surprising inflation numbers. The market is definitely short GBP and everyone I have been talking to in the hedge fund space has been selling GBP against USD or EUR. The pain trade remains higher. We have now broken the high of the year but the main resistance is at 1.3500.

USDJPY is recovering with the US rates and equities. We are back at the 110 level but it will consolidate here in our view. The market has stopped out at the lows and trying to build another long position again.

Emerging Markets: USDCNH has rallied slightly during Asia time yesterday but good offers are coming back at this level up to 6.5000.

USDBRL will be supported at 3.1000 for now but if the pension reforms are approved, it will improve the inflation expectations and USDBRL will drop significantly.

Foreign exchange movements
The market seems very short Gamma on the topside in GBP. As mentioned above, the market is fairly short spot.

There is good demand for NZD ATM for the elections date the following week end after a poll suggested that the ruling party extended the lead.

US yields continue to recover as US published good July JOLTS data and the Treasury Secretary Mnuchin expressed confidence in pushing the tax reform through. Possibility of rate hike just jumped from 26% to 40%.

UK yields surged on highest inflation rates since 2011, and partially contributed by risk-off movement continue to wane.





All three US indices continue to enjoy the risk-on rally with the S&P 500 heading for the 2,500 level despite banks warning on poor trading conditions and revenue in the third quarter. However, we saw Goldman and Bank of America trading 2% plus higher on closing.

Apple announced their much anticipated iPhone8 and iPhone X yesterday (not iPhone9) but Apple shares retreated 0.4% despite trading $4 higher intraday. The iphone X will cost $999 and boost a 5.8-inch OLED screen. 

Teva Pharmaceuticals surged 4.49% as it sells Paragard IUD to CooperSurgical in a $1.1 billion cash deal to reduce debt. Teva Pharmaceuticals new CEO was announced on Monday which already saw the Israel health care stock jumped 13% on Monday’s trading.

M Science, a data-tracking company pessimism on McDonald’s Corp store sales saw McDonald share price fell more than 3.2% to close at $156.34. The fast food chain just hit historical high earlier this week, breaking the $160 mark and is up 28% this year. 
Asia Pacific Stocks
Hong Kong
Analyst Ratings:
-          Anta Sports (2020 HK): Anta Sports Upgraded to Buy at UBS; PT Raised to HK$35
-          Avic Aviation Engine (600893 CH): Avic Aviation Engine Upgraded to Buy at Citic Securities
-          Hysan Dev (14 HK): Hysan Dev Raised to Equal-weight at Morgan Stanley, PT HK$38
-          New World Dev (17 HK): New World Dev Raised to Overweight at Morgan Stanley
-          Tongwei (600438 CH): Tongwei Initiated at Citic Securities with Buy; PT 10.30 Yuan
-          Agricultural Bank of China (1288 HK): Agricultural Bank of China International $500m 3Y Bond at +107.5
-          Bank of Qingdao (3866 HK): Bank of Qingdao $1.203b AT1 Perp NC5 Bond 5.5%
-          Casino sector: Macau September Daily Revenue Trending Lower vs. August, Nomura
-          China Merchants Bank (3968 HK): CMB Financial Leasing Units Markets Up to $115m Loan
-          China Merchants Bank (3968 HK): Royce Says U.S. Should Target Chinese Banks on North Korea
-          Glencore (805 HK): S. Africa’s Numsa Seeks 15% Wage Increase at Glencore Coal Mine
-          Hong Kong Stocks Edge Higher Again With Automakers Standing Out
-          HSBC (5 HK): HSBC Bought Back 2.7M Shares at Avg 735.24 Pence Each Sept. 12
-          Ping An Insurance (2318 HK): Ping An Jan.-Aug. Life Insurance Premium 286.2B Yuan
-          Shimao Property (813 HK): Shimao Property Says Unit Issues Asset-Backed Notes
-          Sino-Ocean (3377 HK): Sino-Ocean Group $600m Perp NC5 5%
-          Yuexiu Property (123 HK): Yuexiu Property Acquired Wuhan Land Parcel for 979.3m yuan

Analyst Ratings:
-          Dip (2379): Initiated at Jefferies with buy
-          Hitachi (6501): Raised to buy from neutral at UBS
-          Kyushu Electric (9508): Cut to neutral from buy at Nomura
-          Lixil (5938): Rated new Outperform at Tokai Tokyo Securities
-          Tokai Carbon (5301): Raised to outperform from neutral at Daiwa

-          Japan Post Holdings (6178): To buy back as much as 72.8m shares from Finance Ministry today
-          Japan Tobacco (2914): To expand sales area for Ploom Tech starter kit and tobacco capsules in Tokyo from Oct. 30
-          Fuji Electric (6504): To acquire Kubota’s stake in Metec Semarang
-          Kobe Bussan (3038): 9-month operating profit +36% y/y to 11.2b yen
-          Kyushu Electric (9508): Forecasts full-year operating profit 95b yen vs analyst est. 127.6b yen; expects to restart Genkai No. 4 reactor in March
-          Moresco (5018): Ends talks to acquire AML Industries, AML Realty
-          Nintendo (7974): Plans to ship Super NES Classic Edition into 2018 due to "incredible demand"
-          Toshiba (6502): Agrees with 20th Century Fox to settle arbitration case
-          Toyota Motor (7203): Sees 1m deliveries in Europe this year

Analyst Ratings:
-          ILU AU: Iluka Cut to Neutral at Credit Suisse, PT A$9.85
-          SKT NZ: Sky Network TV Cut to Hold at Morningstar

-          AJQ AU: Uganda Set to Award Oil Concession to Armour Energy Australia
-          BHP AU: Project Pipeline Replenishing in Top Copper Nation: Association
-          GNC AU: GrainCorp Should Consider Closing Newcastle Port: Credit Suisse
-          MGR AU: Aussie Developer Mirvac Mulls Dollar Bond for Asia Buyers
-          STU NZ: Steel & Tube CEO Dave Taylor to Step Down Sept. 22
-          TRA AU: Turners Automotive to Raise NZ$25m From Share Placement

 UK inflation appears to be rising but what affect will it have on rates? Photo: Shutterstock

– Edited by Adam Courtenay

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