Morning Report APAC: Asia gains after subdued start

• Asian markets make gains after a mixed start and a subdued Wall St 
• US dollar advance slows after rise against yen to two-month high
  
• USDJPY level to watch is still 115.00
  
• Bank of Canada rate hike on Wednesday is priced in but market awaits statement

By Saxo APAC Sales Trading

Economic data of the day (Singapore Time)

Speeches

1105 – US – US Federal Reserve’s John Williams speaks in Sydney

1700 – UK – Bank of England’s Andy Haldane speaks in London 

1900 – UK – BOE’s Ben Broadbent speaks in Aberdeen 

20:00 – GE – European Central Bank’s Benoît Cœuré provides opening remarks at FX meeting 

00:30 – US – Fed’s Lael Brainard speaks on monetary policy in New York

Overnight news

US: Consumer credit rose by 5.8%, or $18.4 billion (exp. $13.5bn), in May, the US Federal Reserve said on Monday. That's the fastest rate in seven months, and comes as revolving credit such as credit cards jumped 8.7%. Non-revolving credit, typically auto and student loans, rose 4.7%. 

Foreign exchange

Very quiet overnight in FX on a tight range following an eventful weekend which didn’t really sustain any volatility.

The level to watch is still 115.00 in USDJPY as the main resistance. Some banks are estimating that the market is already extremely long EURUSD and EURJPY so we could see some selloff soon on profit taking.

Emerging Markets: USDEM was fairly quiet as well despite the rally in US tech stocks overnight. Funds don’t find much risk reward being short USD at these levels against EM. USDBRL is finally finding some good offers and the main support to watch will be 3.2000.

Foreign exchange movement

Rates

Commodities 

Equities

Both Nasdaq and the S&P 500 finished higher as technology and energy stocks drew bidders after the recent slump, while the Dow industrials closed marginally lower, weighed down by Wal-Mart Stores Inc., down 2.8%, offsetting gains of 1% or more from Visa.

Abercrombie & Fitch Co. shares plummeted more than a fifth of their value after the embattled retailer terminated a potential buyout of the company, and Best Buy Co dragged 6.3% lower amid concerns about heightened competition, highlighting the struggles of brick-and-mortar retailers.

European stocks gained with the DAX climbing following data that exports from Europe’s largest economy have jumped 14.1%.

Balfour Beatty PLC fell 3.2%, sliding alongside peer Carillion (down 39.0%) after the construction and facilities services company warned that first-half operating profit would be lower than expectations. Carillion also said CEO Richard Howson has stepped down.

PostNL rose more than 4%, topping Eurostoxx600 after the Dutch outgoing economy minister suggested the country's mail market needed regulatory changes.

Asia Pacific Stocks

Hong Kong 

Analyst Ratings:

•  Jiangyin Hengrun Heavy Industries (603985 CH): New Outperform at SWS 
  
•  58.com (WUBA): New Hold at China Renaissance, PT $48 
  
•  China Merchants Bank (600036 CH): A Shares Cut to Equal-weight at Morgan Stanley 
  
•  CIMC Enric (3899 HK): Raised to Buy at HSBC, PT HK$5.80 
  
•  Citic Bank (998 HK): H Shares Raised to Overweight at Morgan Stanley 
  
•  ENN Energy (2688 HK): Cut to Outperform at Daiwa, PT HK$57.04 
  
•  Huaneng Renew (958 HK): H Shares Cut to Neutral at Macquarie, PT HK$2.55 
  
•  Longfor Prop (960 HK): Cut to Neutral at UBS, PT HK$19.24 
  
•  Minsheng Bank (1988 HK): H Shares Raised to Equal-weight at Morgan Stanley 
  
•  Sany Heavy Ind. (600031 CH): Raised to Overweight at JPMorgan, PT 10 Yuan 
  

Preview: 

•  Citic Bank (998 HK) Places Over 50 Loans on Offer in Secondary Market 
  
•  Geely Auto (175 HK) Geely Auto Expects 6-Month Net to More Than Double on Year 
  
•  Guoyuan Securities (000728 CH) Prelim. 1H Net up 0.62% y/y 
  
•  Hesteel (000709 CH) Says 1H Net to Rise Significantly on Stable Steel Prices 
  
•  Kweichow Moutai (600519 CH) 1H Profit Rises 24.4% Y/y to 15.5bnYuan 
  
•  Standard Chartered (2888 HK) Bank of Kenya to Close 4 Branches Countrywide 
  
•  Wanda Cinema Line (002739 CH) Plans to Buy Wanda Pictures Via Share Sale 
  
•  Fushun Special (600399 CH) Steel Says Dongbei Steel Filed Restructuring Plan 
  
•  Longfor Properties (960 HK) June Property Contract Sales 16.9bn Yuan 
  
•  ReneSola (SOL) to Deliver 42 Megawatts of Solar for Polish Projects 
  

Japan

Analyst Ratings: 

J-REIT rating changes at SMBC Nikko

- Raised to outperform from neutral: Ichigo Office (8975), Japan Prime Realty (8955); 

- Cut to neutral from outperform: Global One (8958), Mcubs MidCity (3227), Premier Investment (8956) 

Preview:

•  Cosmos Pharmaceutical (3349): Full-year operating profit up 19% y/y to 22.2bn yen, in line with company forecast 
  
•  Create SD (3148): Full-year operating profit up 3.5% y/y to 14.4bn yen vs company forecast for 14.7bn yen 
  
•  Kawasaki Kisen Kaisha (9107), Mitsui OSK Lines (9104), Nippon Yusen (9101): Nippon Yusen’s Jeremy Nixon to head Singapore-based Ocean Network Express, the operating company of three companies’ combined container operations. 
  
•  Mizuho Financial (8411): Bank unit forms business venture with WiL LLC 
  
•  Nissan (7201): Mississippi plant workers to vote on joining union 
  
•  Plenus (9945): 1Q operating profit up 66% to 2.05bn yen 
  
•  Retail June sales : 7-Eleven Japan (3382) convenience store sales up 1.5% y/y; Don Quijote (7532) same-store sales up 5.1% y/y; Lawson (2651) convenience existing-store sales down 0.4% y/y 
  
•  Rorze (6323): 1Q operating profit down 36% y/y to 970m yen; maintains full-year forecast at 4.2bn yen 
  
•  Sumitomo Corp (8053): Mulls integration of domestic steel pipe business with Metal One Corp. 
  
•  Suzuki Motor (7269): Netherlands Vehicle Authority sends emissions tests on Vitara to prosecutor 
  
•  Tokyo Electric (9501): Mitsubishi Motors switches its power provider for two of its auto plants to Tepco from Chubu Electric; to invest 3m euros in German power trading platform 
  
•  TSI Holdings (3608): To buy back 1.92% of shares for 1.8bn yen; 1Q operating profit down 29% y/y to 1.7bn yen 
  
•  Tsubaki Nakashima (6464): To buy NN Inc’s precision bearing components operations for $375m in cash 
  

Australia

Analyst Ratings: 

•  Adairs (ADH): Raised to buy at Goldman, PT A$1.10 
  
•  Astro Japan Property (AJA): Raised to overweight at JPMorgan, PT A$7.20 
  
• Ausdrill (ASL): Cut to hold at Argonaut Securities, PT A$1.95 
  
•  Platinum Asset Management (PTM): Raised to neutral at JPMorgan, PT A$5 
  

Preview:

•  Bega Cheese (BGA): Closes loan for Mondelez ANZ grocery unit purchase as club 
  
•  Nufarm (NUF): Eyes ChemChina crop protection assets, the Australian newspaper reports 
  
•  Phileo Australia (PHI): Sells residential subdivision site to Country Garden (2007 HK) unit 
  
•  Oroton (ORL): Gazal (GZL) buys ~7.4% stake for A$1 a share 
  
•  Shopping Centres (SCP): Raised to neutral at Credit Suisse, PT A$2.18
  

Abercrombie & Fitch Co. shares plummeted more than a fifth of their value after the embattled retailer terminated a potential buyout of the company. Photo: Shutterstock

 

– Edited by Susan McDonald

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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