Article / 31 March 2016 at 2:21 GMT

Morning Report APAC: Asia equities still on a roll

APAC Sales Trading Desk / Saxo Capital Markets
Singapore
  • Malaysia’s ringgit extends gains in early trade to seven-month high over USD
  • US crude drops toward $38/barrel due to an increase in American supplies
  • ADP employment rose 200,000 in March, higher than expectations of 195,000

 

By Saxo APAC Sales Trading

Economic data of the day (Singapore Time - GMT + 8 )

0500: KRW – Business Survey Non-Manufacturing (Actual 71 vs. 67) Manufacturing (A:70 vs 66)
0700: KRW – Industrial Prod MoM (Exp. 0%, Prev. -1.8%) YoY (Exp. -0.2%, Prev. -1.9%)
0800: NZD – Business Confidence (Prev. 7.1)
08:00: AUD – New Home Sales (Prev. 3.1%)
08:30: AUD – Private Sector Credit MoM (Exp. 0.5%, Prev. 0.5%) YoY (Exp. 6.5%, Prev. 6.5%)
1300: JPY – Housing Starts YoY (Exp. -2.4%, Prev. 0.2%)
1300: JPY – Construction Orders YoY (Prev. -13.8%)
1400: EUR –German Retail Sales MoM (Exp. 0.4%, Prev. 0.7%) YoY (Exp.2.2%, Prev. -0.8%)
1555: EUR –German Unemployment Change (Exp. -6k,  Prev.-10k) 
1630: GBP – Mortgage Approvals (Exp. 73.5k, Prev. 74.6K)
1630: GBP – GDP QoQ (Exp. 0.5%, Prev. 0.5%) YoY (Exp.1.9%, Prev. 1.9%)
1630: HKD – Retail Sales Value YoY (Exp. -7.8%, Prev. -6.5%) Volume YoY (Exp.-6.5%, Prev. -5.2)
1700: EUR – CPI YoY (Exp. -0.1%, Prev. -0.2%) Core YoY (Exp. 0.9%, Prev. 0.8%)
2030: CAD – GDP MoM (Exp. 0.3%, Prev. 0.2%) YoY (Exp.1.1%, Prev. 0.5%)

2030: USD – Initial Jobless Claims (Exp. 265k, Prev. 265k) Continuing Claims (Exp. 2200k, Prev. 2179k)
2100: USD – ISM Milwaukee (Prev. 55.2)
2145: USD – Chicago Purchasing Manager (Exp. 50.7, Prev. 47.6)

Speeches

1300: USD – Fed’s Evans Speaks on Econ and Policy
1500: GBP – Bank of Governor Mark Carney Speaks at FSB Briefing in Tokyo
1500 – IMF’s Lagarde, PBOC’s Zhou speak at French Treasury seminar
2145: USD – Fed’s Evans Answers Q&A on Econ and Policy in NY

Overnight news

  • US: ADP employment rose 200,000 in March, higher than expectations of 195,000 and confirmed ongoing robust labour market conditions.
  • Slight upside surprise in the flash German CPI inflation read for March rose 0.8% month on month and 0.1% year on year. This suggests a little upside risk to tomorrow's flash euro area inflation release for March
  • Chicago Federal Reserve president Charles Evans spoke twice, initially to CNBC and then again in a prepared speech to the Forecasters Club in New York. He saw risks tilted towards the downside, suggesting a “very shallow path” for interest rates was likely in the next three years. Evans said the “hurdle is high” for an April hike and said seasonal issues with inflation measurements could muddy the data until late summer. Evans is the most overtly dovish of the current regional Fed presidents but also included some more confident comments, saying US economic fundamentals are quite good and repeating last week’s view that at least two hikes are probable this year.
  • Europe: There was a dip in the headline Economic Sentiment Indicator in March from 103.9 to 103.0. Industrial and service sector confidence declined despite an improvement in March’s PMIs. By country, German sentiment was steady but sentiment in France and Italy declined.


Foreign exchange

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The bearish shift for the broad USD extended. Commodity currencies strengthened further despite an ongoing struggle for crude oil to rally amid broad-dollar weakness.

COP, BRL, MXN and ZAR gained 1.5%, 0.7%, 0.3% and 0.8% against the USD, respectively. In G10, CAD and NOK were 0.6% and 0.5% higher, but the EUR posted only a modest gain 0.2%, and JPY was nearly unchanged during the session.

Watch for quarter-end flows to dominate currencies today.

Foreign exchange movements
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CNH volatilities after the onshore was fixed have been more than 400 pips lower over the last two days. Elsewhere in G10, volatilities are generally lower given the improved risk sentiment. USDJPY and other JPY crosses have been offered in vega.


Rates
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European sovereign bond yields gradually rose through the day, with 10-year yields up 2bps in the UK and 2bps in Germany. US Treasury yields were also higher, with the 10-year 2bps higher, supported by the solid ADP report.


Commodities 

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Equities

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It was generally a positive session for equities. In Europe, steelmakers were in demand after India’s Tata Steel announced plans to sell its UK business. The announcement sparked hopes of Continental consolidation. ThyssenKrupp surged 8.3%, ArcelorMittal 3.6% and Outokumpu lifted 6.5%.

US markets opened with the major indices enjoying a still-fresh tailwind from the Fed chair Janey Yellen's dovish comments yesterday. Consumer services and insurance were the day's strongest sectors, while real estate and utilities lagged.

After the close, Micron reported a beat on earnings, but missed on revenue, citing 10% declines in both DRAM average selling prices and sales volume.

Watch for Fed optimism to continue to push stocks higher today in the Asian session. 

Credit

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Company news

Japan

-    Colopl (3668 JP): To launch tender offer for Eighting (3785  JP)
-    Evolable Asia (6191 JP): Starts trading on Mothers after IPO priced at 1,800 yen
-    Hitachi Transport (9086 JP): Confirms capital tie-up with Sagawa; shares rose 5.8% yesterday after Nikkei report on deal
-    Mitsumi Electric (6767 JP): Holders to receive 0.59 share of Minebea (6479 JP) for each share held in merger; equals around 504 yen/share at today’s close vs Mitsumi’s average of 572 yen since deal announced in December; Mitsumi also posts wider-than- expected preliminary. full-year losses
-    PR Times (3922 JP): Starts trading on Mothers after IPO priced at JPY 1,340
-    Sharp (6753 JP): Foxconn announces it will acquire company Nikkei tweets
-    Takata (7312 JP): Fell 19% in last 20 minutes of trading yesterday after company said to put worst-case airbag recall costs 2.7 trn yen
-    Toshiba (6502 JP): Selling 80.1% stake in lifetsyle unit to Midea for JPY 53.7 bn; expects to post pre-tax gain of JPY90 bn for April to June quarter

xxx
 The Malaysian Ringgit is at a seven month high against the USD. Photo: iStock

 
– Edited by Adam Courtenay


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