Article / 11 April 2018 at 2:04 GMT

Morning Report APAC: Asia markets mixed as trade fears ease

APAC Sales Trading Desk / Saxo Capital Markets

  • President XI’s speech lifted markets and risk mood
  • The Dow was up 428 points and S&P 500 up 43 points
  • Geopolitical tension is rising after the weekend's chemical weapons attack in Syria
  • The USD is generally weaker with the risk-on tone in the markets
  • The oil price surged amid easing trade tension
  • Markets in Asia were mixed in morning trade


By Saxo APAC Sales Trading

Economic data of the day (Singapore Time)




 0900 – CH – PBoC governor Yi Gang speaks at Boao Forum, China

1105 – AU – Reserve Bank Of Australia Governor Philip Lowe speaks in Perth 

1415 – JN – Bank of Japan's Haruhiko Kuroda makes a speech in Tokyo 

1900 – EC – ECB’s Mario Draghi speaks in Frankfurt 

2100 – EC – ECB’s Pentti Hakkarainen speaks in Brussels 

2240 – EC – ECB’s Angeloni speaks in Brussels 

0200 – US – March FOMC meeting minutes 

0700 – NZ – RBNZ’s John McDermott speaks on inflation targeting

Overnight news


US: President XI’s speech lifted markets and risk mood. Trump thanked Xi for his words on tariffs resulting in a very positive risk-on mood. Stocks rose significantly, the S&P500 up1.8%. 

Russia rejected a UN resolution to create an expert body on Syria. Geopolitical tensions are on the rise as coalition forces discuss their response to the weekend's chemical weapons attack in Syria. Al Jazeera reported seeing coalition planes flying near the Syrian-Iraq border. Trump cancelled his trip to Peru to work on his response. The GPR index, which measures geopolitical risk, is at the highest since the Iraq war. 

US PPI data beat expectations, the headline rising to 3%, up from 2.8% and above the 2.9% estimate. This will raise expectations for a CPI beat later today.

 China's president said he would work to 'open' the country's economy, easing trade war fears. 
Photo: Shutterstock

Europe: The ECB’s Ewald Nowotny commented that the ECB could lift its deposit rate to -0.2% from -0.4%, to start the rate hike process and the ECB will stop its bond buying program this year. This sent the EUR sharply higher. The ECB responded by saying that the views expressed were solely those of Nowotny. 

The EU’s chief negotiator Michel Barnier sounded positive yesterday, saying that Theresa May has brought clarity.

Norwegian CPI data missed expectations, reporting a 2.2% number versus 2.4% expected. This saw NOK as one of the weakest performers. Norges bank will be disappointed with this as it shifts its focus to being more hawkish.


Foreign exchange



USD: Generally weaker with the risk-on tone in the markets; save-haven currencies such as JPY and CHF, however, underperformed.

EUR: Nowotny’s comments sent EUR higher, confirming that the test below the trendline from early 2017 was a false break. The pair reclaimed its 50-day moving average. 

NOK: A miss on the CPI data yesterday kept NOK under pressure despite the very strong oil price action. The CPI miss will create a headache for the Norges bank as it has turned more hawkish.

Emerging Markets: The rout in the rouble in the wake of the sanctions imposed by the US has deepened, the RUB falling a whopping 3.8% more yesterday; that’s 8.4% in two days. TRY also continues to be under pressure as it trades to its weakest level ever too. On the positive, MXN performed, up 0.5% in a risk-on pro-trade mood.

Foreign exchange movements


Rouble volatilities have exploded in line with spot, and liquidity has evaporated. Vols have effectively doubled in two days with 1 month going from 9% to 18% .

107 strike for 1 yard in USDJPY expiring today is the highlight in G10. 

The rest of the majors continue to be quiet in the vol space, with spot moves pretty muted despite some action, specifically EUR.


US Treasuries were lower across the curve as risk-on sentiment dominated the whole market, gaining support from a further ease of trade tensions. The yield curve further flattened with 2y10y now below 50 pips. Libor-OIS not easing gives signs that funding is still tight.

Core European bonds were lower after Nowotny made hawkish comments on a possible lifting deposit rates from -0.4% to -0.2%. Peripherals underperformed as they will be more impacted by funding; Portugal led the decline ahead of a new 15-year issuance priced on Wednesday.







US: The Dow was up 428 points and S&P 500 up 43 points. Stocks rallied as Wall Street breathed a sigh of relief after China's president said he would work to "open" the country's economy, easing trade war fears. A global equity rally was triggered as Chinese President Xi told the Boao Forum that Beijing plans to give foreign companies greater access to financial and manufacturing sectors. He also talked about a cut in tariffs on car imports and an improvement in protection of intellectual property, among other measures. 

Energy stocks rose broadly, as the price of crude oil gained 3.6%. Exxon Mobil Corp (XOM) added 2.9% in its biggest one-day jump since Sep 2016, and Chevron (CVX) rose nearly 2.5%. Also, the largest energy exchange-traded fund tracker, Energy Select Sector SPDR (XLE), rallied 3.3%, recording its best session since Nov. 2016. 

Shares of VeriFone (PAY) surged 52% after the payment and business service provider said it has agreed to a $3.4 billion private equity acquisition by a group led by Franciso Partners. The deal will be worth $23.04 per share in cash, a 54% premium. 

Aeronautical giant Boeing (BA) scored a big deal with Indonesia's Lion Air, with the stock getting a further boost from Xi Jinping's promise to cut import tariffs, easing trade war fears. Boeing stock rose 3.8% to 334.83 on the stock market, although shares are still below their 50-day moving average. 

Europe:  European stock markets finished higher after Chinese President Xi Jinping sought to soothe investor concerns about the prospect a full-scale trade war between the world's two biggest economies. UK's FTSE was up 72 points and Germany's Dax closed positive 135 points.

Basic resources stocks — with their heavy exposure to China — rallied in afternoon trade to close up nearly 2.7% following comments from Xi. Anglo American (AAL) was the second-best sectoral performer, rising in afternoon trade to close over 5% higher. BHP Billiton (BLT), Arcelormittal (MT) and Rio Tinto (RIO) all finished Tuesday around 3% in the green. 

Looking at individual stocks, shares of LVMH closed nearly 5% higher after hitting fresh record highs earlier in the session. The world's biggest luxury goods group advanced towards the top of the European benchmark after it posted stronger-than-anticipated sales growth in the first three months of 2018. The upbeat start to the calendar year was supported by a thriving Chinese appetite for luxury goods. 

Raiffeisen Bank International (RBI), fell 1.8%. Russian-based shares came under pressure in reaction to weekend news of US sanctions on the country. BNP Paribas said it will buy the core banking operations of Raiffeisen’s Polish unit for 775 million euros ($953 million). The French bank’s shares were up 0.7%. 

Hong Kong:  The Hang Seng Index (HSI) jumped 499 points or 1.7% to 30,728 on bolstered market confidence. President Xi Jinping's remarks at the Boao Forum for Asia 2018 stressed China's substantial relaxation on foreign market entry will have a positive impact on China's economic growth. 

The Chinese Academy of Social Sciences (CASS) official forecast urged China to beef up efforts in opening up insurance industry. Ping An (2318.HK) and China Life (2628.HK) soared 5% and 1.4%. PICC Group (1339.HK) rallied 5.2% after progress on the A-share prospectus had been revealed. 

Chinese property developers Country Garden (2007.HK) and CHINA RES LAND (1109.HK) shot up 5.9% and 2.4%. Sunac (1918.HK) rocketed 14.3% to $34.3. BNP analysts said Sunac won market share amid lower leverage. 

Auto import tariffs were lowered considerably after Xi Jinping's comments on imports expansion. Chinese auto dealers trended up. Yongda Auto (3669.HK) leaped 7.9%. Zhongsheng (881.HK) and Zhengtong Auto (1728.HK) surged 7% and 11.3%

– 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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