Article / 04 July 2017 at 1:47 GMT

Morning Report APAC: Asia gets lift as dollar firms on strong US data

APAC Sales Trading Desk / Saxo Capital Markets

  • Gains in the US dollar lifted Asian markets
  • The US dollar had a strong rally following the ISM data release
  • ISM US Manufacturing was at its highest reading since August 2014 
  • USD strengthening weighed on gold prices
  • US stocks kicked off July with gains in energy and financials but tech rally fizzled 

By Saxo APAC Sales Trading

Economic data of the day (Singapore Time)




1630 – UK – Bank of England publishes FPC record of meeting held on June 21

2030 – EC – European Central Bank’s Peter Praet speaks in Rome 

0030 – EC – ECB’s Ewald Nowotny speaks in Vienna panel discussion

Overnight news

US:  ISM Manufacturing was much better than expected at 57.8 from 54.9 (exp. 55.3), the highest reading since August 2014. The outlook for manufacturing was greatly improved as the pace of new orders increased four points to 63.5 last month from 59.5 in May. 

UK:  UK PMI came in lower than expected at 54.3 from 56.3 (exp. 54.3). Demand from domestic and export markets both slowed.

Foreign exchange



USD had a strong rally following the ISM Manufacturing number. It will be interesting to see if sellers will emerge in USD or the move created by the European Central Bank comments will continue. We have divergent views here.

EUR should find good selling interest close to 1.1500, which has been a strong resistance since 2015. The risk-reward favours a downside move.

Emerging Markets: USD was bid overnight against most EM currencies. USDTWD confirmed the break above the 100-day moving average helped by the selloff in technology shares in the US.

Foreign exchange movement


There is some interest in medium-term EUR upside from real money investors.

Good buying interest to note in risk reversal in USDJPY (buyers of USD puts) to hedge the long spot positions from funds.


US yields are higher across the curve, supported by the surprisingly good ISM manufacturing data.

Bunds pared earlier gains after the US ISM data. Peripherals outperformed, especially Spain and Italy, as the fundamentals improved.






US stocks kicked off July with gains in energy and financials, while the tech shares rally fizzled.

General Electric gained 1.63% as the company completed its buyout of Baker Hughes (up 5.82%), merging it with its own oil and gas equipment and services operations to create the world's second-largest oilfield service provider by revenue.

Walt Disney Co. climbed 1.7% on Monday, after the New York Post said a rumour circulated last week that Verizon Communications Inc. (up 0.76%) is eyeing a purchase of Disney. 

Tesla Inc. slumped 2.5% after Elon Musk, the company’s CEO, said production for its Model 3 electric car should start this Friday, after it has “passed all regulatory requirements for production two weeks ahead of schedule”, Musk said on Twitter. With share prices at an all-time high, some investors may question whether the Model 3 can be produced profitably and with strong initial quality. 

European shares ended their four-day losing streak, boosted by the commodities sector after upbeat manufacturing data from China and a continued rally in oil prices. 

Nets AS surged 11% after the Danish digital-payments company confirmed it has been approached by potential buyers and it is reviewing its options, with “no certainty” about the outcome.

Asia Pacific Stocks

Hong Kong 

Analyst Ratings: 

  •  China Yuhua Education (6169 HK): New Hold at Quam Ltd, PT HK$2.26 
  •  China Gas (384 HK): Upgraded to Neutral at UBS; PT Raised to HK$16.20 
  •  China Resources Gas (1193 HK): Raised to Buy at UBS, PT HK$32 
  •  China Vanke (2202 HK): H Shares Raised to Buy at Morningstar 
  •  ENN Energy (2688 HK): Raised to Buy at UBS, PT HK$59 
  •  SJM Holdings (880 HK): Cut to Neutral at Nomura 
  •  Wisdom Education (6068 HK): New Buy at Quam Ltd, PT HK$3.37 


  •  Argentina Approves Building of China Gezhouba’s (600068 CH) Patagonia Dams 
  •  China Evergrande (3333 HK) June Contract Sales 61.1bn Yuan 
  •  China Merchants Bank (3968 HK) Says LeEco Unit’s Interest Overdue: Herald 
  •  Agile Group (3383 HK) June Pre-Sales Value 7.93b Yuan 
  •  China Hongqiao (1378 HK) to Be Removed From Hang Seng Family of Indices
  •  China Railway (390 HK), Taiyuan City to Cooperate on Infrastructure 
  •  China Shenhua (1088 HK) A Shares to Remain Suspended Until Aug. 4 
  •  CRRC (601766 CH) to Participate Establishment of 113.9bn Yuan Private Equity 
  •  Huishan Dairy (6863 HK) Restructuring to Involve Grouping Chairman’s Assets 
  •  Yili Industrial (600887 CH) Says Bid for US Stonyfield Failed 


Analyst Ratings: 

  •  Kewpie (2809): Downgraded to Neutral at Macquarie; PT Cut to 3,200 yen 
  •  Kubota (6326): Initiated at UBS with Buy; PT 2,250 yen 
  •  Sanyo Chemical (4471): Sanyo Chemical Cut to Neutral Plus at Iwai Cosmo; PT 6,000 yen 


  •  Aohata (2830): First-half group operating profit +69% to 535m yen 
  •  Fuji Co. (8278): First-quarter operating profit -12% to 1.7bn yen 
  •  Honda (7267): Forms JV with Hitachi Automotive Systems to make electric motors by March 2020 in Japan 
  •  Idemitsu (5019): To raise as much as 138.5bn yen via public share sale; founding family plans to block planned public share sale 
  •  Japan Investment Adviser (7172): Reports preliminary first-half operating profit up151% to 1.6bn yen 
  •  Jastec (9717): First-half group operating profit up 24% to 1.1bn yen 
  •  Kansai Electric (9503): Plans to build 75MW biomass power plant in Japan 
  •  Kewpie (2809): Cuts full-year operating profit forecast by 6.1% to 31bn yen 
  •  Kobayashi Pharma (4967): Preliminary half year operating profit at 10.3b yen, beating company forecast by 35.5% 
  •  Mitsubishi Tanabe Pharma (4508): Gets Japan approval for Canalia tablets 
  •  Nippon Filcon (5942): First-half net income up 99% y/y to 1.6bn yen 
  •  Nissan (7201): Co. June US auto sales up 2% year-on-year, estimate down 2% 
  •  Panasonic (6752): Fitch affirms company’s ratings at BBB with stable outlook 
  •  Retail (June sales): H2O Retailing (8242) Hankyu Hanshin store sales up 4.6% y/y; Isetan Mitsukoshi Holdings (3099) department store sales down 1% y/y; Takashimaya (8233) 13 store sales up 4.9% y/y 
  •  Sanyo Chemical (4474): Cut to neutral plus at Iwai Cosmo 
  •  Seibu Holdings (9024): To buy operations from Staywell Hospitality for 4.3bn yen 
  •  Takara Printing (7921): Full-year group operating profit down 6% to 1.5bn yen 
  •  TKP (3479): To conduct 7-for-1 stock split on Sept. 1 
  •  Toshiba (6502): South Korea’s SK Hynix has proposed to finance Japan’s government-led consortium bid for co.’s chip business via convertible bonds, Reuters reports; Toshiba files opposition with U.S. court on Western Digital case 
  •  Toyota (7203): Co. June US auto sales up 2.1%, estimate up 1.2% 
  •  Yondoshi (8008): First-quarter group operating profit down 13% to 1.3bn yen 


Analyst Ratings: 

  •  Dexus (DXS): Raised to neutral at JPMorgan, PT A$9.50 
  •  Emeco Holdings (EHL): New add at Morgans Financial, PT A$0.15 
  •  Hansen Tech (HSN): Cut to accumulate at Ord Minnett, PT A$4.59 
  •  Investa Office (IOF): Raised to overweight at JPMorgan, PT A$5 
  •  Spark NZ (SPK): Cut to neutral at New Street Research, PT NZ$3.90 
  •  Virtus Health (VRT): Raised to buy at Morningstar 


  •  Strong Aussie Dollar Complicating Equation as RBA Meets: Chart 
  •  Aveo Group (AOG): Australian competition watchdog said Monday it will investigate matters raised about co.: AFR 
  •  Bapcor (BAP): Refinances debt facilities 
  •  Collins Foods (CKF): Trades ex-dividend 
  •  Fortescue (FMG), BHP Billiton (BHP), Rio Tinto (RIO): Iron ore market facing extreme volatility for couple of years 
  •  Iron Road (IRD): Says Project capital cost estimate reduced by $295m 
  •  Magellan (MFG): Said to weigh A$1bn IPO of new investment fund: AFR 
  •  Newcrest (NCM), Northern Star (NST), Evolution (EVN), Saracen (SAR), Regis Resources (RRL), Resolute Mining (RSG), OZ Minerals (OZL): ‘Vulnerable’ gold drops most this year as USD recovers losses 
  •  Paladin Energy (PDN): Names administrators to assess ops, finance 
  •  Whitehaven Coal (WHC): Europe 2018 coal extends gains to highest since Nov. 2016 
  •  Woodside (WPL), WorleyParsons (WOR), Oil Search (OSH), Beach Energy (BPT), Karoon (KAR), Origin Energy (ORG), Santos (STO): Oil extends longest rally this year as US drilling slows



ISM Manufacturing was much better than expected at 57.8 from 54.9, the highest reading since August 2014. Photo: Shutterstock


– Edited by Susan McDonald

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