Morning Report APAC: Asia markets mixed as trade fears ease
- 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
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%.
Foreign exchange movements
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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