Article / 08 August 2017 at 1:44 GMT

Morning Report APAC: Asia marks time ahead of China trade data

APAC Sales Trading Desk / Saxo Capital Markets
Singapore







  • Asian markets are lower ahead of China trade data
  • North Korea vows to bolster its nuclear arsenal in response to tough UN sanctions
  • South African President Jacob Zuma faces a secret ballot no-confidence motion
  • St Louis Fed President James Bullard says Fed should leave rates unchanged
  • Iron ore strength continues, with further evidence of Chinese steel overcapacity

 

By Saxo APAC Sales Trading

Economic data of the day (Singapore Time)


s

 



















Speeches

None

Overnight news

North Korea:  North Korea vowed to bolster its nuclear arsenal and launch "thousands-fold" revenge against the United States in response to tough UN sanctions imposed after its recent intercontinental ballistic missile launches. In a statement carried by state media, the North Korean government said the sanctions were a "violent infringement of its sovereignty" that was caused by a "heinous US plot to isolate and stifle" North Korea. 

US Federal Reserve:  St Louis Fed President James Bullard said that the Federal Reserve should leave interest rates unchanged because inflation was not likely to climb higher even as the US job market continues to recover. "The current level of the policy rate is likely to remain appropriate over the near term," he said. Bullard contended that gauge of inflation is projected to rise to only 1.8%, even if the US unemployment rate drops to 3% from 4.3% currently. The minute pressure on inflation does not justify a further rate hike to slow growth.  

Federal Reserve Bank of Minneapolis President Neel Kashkari said “inflation has been coming up short, a little low, relative to our 2% target. That actually matters.”

“So I would like to see higher wage growth for workers’ sake, for towns’ sake, and for the Fed’s sake as well,” he said.

South Africa:  Jacob Zuma faces a secret ballot no-confidence motion in South Africa's parliament, imperilling his presidency. National Assembly Speaker Baleka Mbete surprisingly approved the anonymous vote, giving cover to ruling ANC lawmakers disgruntled with Zuma in the face of a series of scandals. The rand jumped as much as 2%.

Foreign exchange


f

 











The USD was very quiet overnight against the G10 currencies .

NZD continued to drop following the lower-than-expected inflation numbers yesterday morning. The daily support is at 0.7350.

The market continues to be extremely long EUR crosses such as EURGBP, EURUSD and EURJPY.

Emerging Markets: USDZAR was the main mover in the EM space, dropping 2% overnight on the secret vote to get rid of Jacob Zuma. There is still an 80% chance that he will stay.


Foreign exchange movement

v

 

The only buying interest is around the next Federal Reserve Jackson Hole meeting (August 24 to 26) for USD gamma.

There are still buyers of downside in AUD and NZD. The risk reward of being short AUD through options, as long as we remain below 0.8000, is very good.


Rates
r

 

US Treasuries were sold off earlier in the session as equities were reaching all-time highs. They then recouped after Federal Reserve speakers said policy should remain stable instead of looking for a hike too soon.

Core European yields fell slightly, supported by rallying gilts. The US-UK 10-year spread widened to the highest since end June.


Commodities 

 

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Equities
e

 











Overall, US stocks made modest gains, the S&P 500 ending at a record and the Dow extending to its ninth session of such closing highs. Eight of the 11 primary S&P 500 sectors ended higher on the day, with consumer staples and technology shares leading.

NxStage Medical Inc. surged 28% after Germany’s Fresenius Medical Care AG & Co. (down 1.7%) said it would acquire the medical-device firm for around $2bn to boost its kidney dialysis business.

Rockwell Collins Inc. jumped 6.8%, on reports that United Technologies Corp. (down 2.4%) is considering a takeover of aircraft and defense technology company.

Teva Pharmaceutical Industries Ltd slumped for the third session, dropping another 9.8% and ending at its lowest level since 2003 as Morgan Stanley turned bearish on the company in the aftermath of disappointing results.

European stocks consolidated last week’s rally and closed broadly lower on a downbeat reading on German industrial output.

Paddy Power Betfair dropped 4.7% after the online betting company said its current CEO, Breon Corcoran, is stepping down after 16 years with the company, and Peter Jackson was named as his successor.

PostNL fell 5.1% after the parcel delivery company reportedly said quarterly profit would come in at the bottom half of its expected range.


Asia Pacific Stocks

Hong Kong 

Analyst Ratings: 

  •  China Oilfield Services (2883 HK): H Shares Initiated at Goldman with Sell 
  •  Cnooc (883 HK): Raised to Buy at Goldman, PT $131 
  •  HSBC (5 HK): Raised to Hold at Independent Research, PT 790p 
  •  Kerry Logistics (636 HK): New Buy at Hua Tai Securities, PT HK$13.90 
  •  Logan Property (3380 HK): New Buy at BOCOM, PT HK$8.11 
  •  Shanghai AJ (600643 CH): New Outperform at SWS 
  •  Shenzhen Int’l (152 HK): New Buy at Hua Tai Securities, PT HK$16.40 
  •  Sinotrans (598 HK): New Buy at Hua Tai Securities, PT HK$5.40 
  •  Tasly Pharmaceutical (600535 CH): Raised to Neutral at Credit Suisse 
  •  Zhejiang Longsheng (600352 CH): Cut to Underweight at Morgan Stanley 
  •  ZTE (000063 CH): H Shares Raised to Buy at Goldman 

Preview: 

  •  China Comm Cons (1800 HK): AECOM and China Communications Construction in Joint Venture 
  •  China Comm Cons (1800 HK): China Communications Parent Seeks Up to 16bn yuan in Bond Sale 
  •  China New Town: (1278 HK): China New Town Development Enters Into A MOU W/MGM Resorts Intl 
  •  China Shenhua (1088 HK): China Shenhua Gets Approval for Baotou Coal-to-Olefins Upgrade 
  •  CNBM (3323 HK): Adjustment to Consideration Under Luoyang Glass Pact 
  •  Dalian Wanda (169 HK): Dalian Wanda Is Said to Seek Sale of $A2B Australia Projects:AFR 
  •  Everbright Int’l (257 HK): China Everbright Intl 1H Revenue Rises 24% To HK$1.64B 
  •  Geely Auto (175 HK): July Vehicle Sales Rise 88% Y/y to 91,104 Units 
  •  Glencore (805 HK): Reader Interest Rises; Shares Advance 2.1% 
  •  Glencore (805 HK): Glencore, RWE Options Underprice Earnings Moves; EON Overpriced 
  •  Great Wall Motor (2333 HK): Great Wall Motor July Vehicle Sales Edge Up to 69,063 Units 
  •  HSBC (5 HK): HSBC Bought Back 1.31m Shares at Avg 767.99 Pence Each Aug. 7 
  •  Kaisa Group (1638 HK): Kaisa Group July Contract Sales Fall 25% on Year to 2.16b Yuan 
  •  Sinopec (386 HK): Sinopec Closing Addax Petroleum Offices in Geneva, Houston 
  •  Tencent (700 HK): China-Backed Tang Media Buys Film Distributor From AMC, Regal 
  •  Tongda Group (698 HK): Tongda Group Expects 1H Net Income to Drop 20%-30% on Year 
  •  Wharf Holdings (4 HK): Investors Bet on Wharf’s Property Review Ahead of Earnings 
  •  ZTE (000063 CH): ZTE Applies for Mandatory Takeover Bid for Netas Minorities 

Japan

Analyst Ratings: 

  •  Hitachi Metals (5486): Cut to neutral from outperform at Daiwa 
  •  Suzuki Motor (7269): Raised to outperform from neutral plus at Mito Securities 

Preview:

  •  Aichi Bank (8527): 1Q net income up 56% y/y to 908m yen 
  •  Care Service (2425): To conduct 2-for-1 stock split on Oct. 1 
  •  Daiichikosho (7458): 1Q net income surges to 3.8bn yen from 618m yen a year earlier 
  •  Daiichi Sankyo (4568): India’s Supreme Court scheduled to hear Daiichi’s plea against Singh brothers and their holding companies on Aug. 11 
  •  Daiwa Industries (6459): Half-year operating profit dips 13% y/y to 2.8bn yen, undershoots company forecast by 13% 
  •  Elecom (6750): 1Q net income up 3.8% y/y to 1.4bn yen 
  •  Funai Electric (6839): Q1 operating loss narrows to 2.3bn yen from 2.9bn yen loss a year earlier 
  •  Hamamatsu Photonics (6965): 9-month operating profit up 4.8% y/y to 16.5bn yen 
  •  Hitachi Metals (5486): Cut to neutral from outpeform at Daiwa 
  •  Japan Drilling (1606): Q1 operating loss widens to 1.1bn yen from 144m yen loss a year earlier 
  •  Japan Steel Works (5631): Lifts full-year operating profit forecast 12% to 14bn yen 
  •  KLab (3656): Raises full-year operating profit forecast to range of 2.2bn-4bn yen from 600m-2.9bn yen 
  •  Lasertec (6920): Full-year operating profit up 12% y/y to 4.96bn yen, beats company forecast by 9% 
  •  Mebuki FG (7167): Q1 net income up 88% y/y to 12.1bn yen 
  •  Mitsubishi Estate (8802): Logistics REIT to list on Tokyo Exchange 
  •  Miura (6005): 1Q operating profit up 32% y/y to 2.1bn yen 
  •  Nichias (5393): 1Q operating profit up 20% to 4.66bn yen 
  •  Nishi-Nippon FH (7189): 1Q net income at 7.4bn yen, maintains full-year forecast at 20bn yen 
  •  Nissha Printing (7915): 1Q operating loss at 207m yen, narrower than analyst estimate for 600m yen loss 
  •  Nissin (9066): 1Q operating profit +31% y/y to 1.7bn yen 
  •  Nissin Kogyo (7230): 1Q operating profit declines 3.7% y/y to 3.1bn yen, while net income up 36% to 1.4bn yen 
  •  Oita Bank (8392): Lifts full-year net income forecast 33% to 7.7bn yen 
  •  Penta-Ocean Construction (1893): 1Q operating profit down 12% to 6.5bn yen 
  •  Pioneer (6773): Swings to 1Q net loss of 2.0bn yen from net income of 1.3bn yen a year earlier 
  •  Rakuten (4755): 2Q operating profit at 28.2bn yen vs analyst estimate for 27.2bn yen 
  •  Sankyo (6417): 1Q operating loss narrows to 2.3bn yen from 2.7bn yen loss a year earlier 
  •  Shimadzu (7701): 1Q operating profit falls 14% y/y to 3.9bn yen 
  •  SoftBank (9984): 1Q operating income up 17% y/y to 374bn yen, excluding 105.2bn yen profit derived via its Vision Fund 
  •  Suntory Beverage & Food (2587): 1H net income up 15% y/y to 20.5bn yen 
  •  Taiyo Yuden (6976): 1Q operating profit up 65% y/y to 3.4bn yen 
  •  Takasago Thermal (1969): 1Q operating profit up 84% to 2.57bn yen; more than doubles 1H target to 3.8bn yen 
  •  Tokyo Tatemono (8804): 1H operating profit down 4.8% to 13.3bn yen 
  •  Towa Pharm (4553): 1Q operating profit up 78% y/y to 2.4bn yen 
  •  Unipres (5949): 1Q operating profit up 79% y/y to 6.3bn yen 
  •  Wacom (6727): 1Q operating loss narrows y/y, turns net profit 
  •  Yamaichi Electronics (6941): Lifts half-year operating profit forecast up 44% to 2.2bn yen 

Australia:

Analyst Ratings: 

  •  MYX AU: Mayne Pharma Raised to Buy at Wilsons, PT A$1.15 

Preview:

  •  NCM AU: Gold Sector’s Tough Dating Rules May Yet Deliver Some Big Deals 
  •  RIO LN: Rio Tinto Bought 268,100 Shrs at 10 UK Pence Each From JPMorgan 
  •  PGW NZ: PGG Wrightson Full-Year Revenue, Ebitda Decline; Sees higher FY18 earnings

n
 The North Korean government said UN sanctions imposed after its recent missile launches were a "violent infringement of its sovereignty". Photo: Shutterstock

 

– Edited by Susan McDonald


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