Article / 14 September 2017 at 2:20 GMT

Morning Report APAC: Asia mixed as dollar holds onto gain against yen

APAC Sales Trading Desk / Saxo Capital Markets
Singapore

 

  • Asian markets are mixed as they awaited China data
  • The US dollar gained on renewed hopes for tax reform
  • It held steady at close to a four-year high against the yen
  • The US blocked a Chinese-backed investor from buying Lattice Semiconductor 
  • The UK jobless rate fell to a 42-year low of 4.3%, from 4.4% a month ago 
  • WTI crude oil rallied to trade at close to the $50 level


By Saxo APAC Sales Trading

Economic data of the day (Singapore Time)


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Speeches

2330 – EC – Bundesbank’s Jens Weidmann speaks in Frankfurt

Overnight news

US:  President Trump blocked a Chinese-backed investor from buying Lattice Semiconductor Corp, citing national-security risks. It was just the fourth time in 27 years that a US president has ordered a foreign takeover of an American firm stopped because of national-security risks. It indicates a poor outlook for China deals subject to the same approval. 

President Trump urged Congress to move forward with tax reform, tweeting “the biggest Tax cut & Reform package in the history of our country will soon begin. Move fast Congress!” Wall Street seems to be given some hope that tax reform could still happen this year.

US PPI inflation came in a tenth below expectations at 0.2% m/m, with ex-food and energy up 0.1% m/m.

UK:  The jobless rate fell to a 42-year low of 4.3% from 4.4% a month ago, with the number of job additions increasing to 181,000 from 125,000. However, wage growth did not catch up. It was at 2.1% lower than market expectations of 2.3%. It is now a dilemma as wage upside pressure did not follow inflation.

 








Foreign exchange

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USD was still in the driver seat overnight, and has gained against all major currencies after the White House continued to urge faster release of tax reform plan.

EURUSD is back to the 1.18 handle, and 1.1800 is a key support level today as it is near the rising trend line, and a psychological level as well.

GBPUSD has retreated from yesterday’s sharp rise, after weak wage data raised doubts on sustainability of high inflation rate.

Emerging markets: USD's move still dominates, and USDCNH surged to just shy of the 6.55 handle. Although it failed to break higher, eyes will be on today’s fix rate onshore. USDTWD was back firmly above the 30 handle, as TWD was pressured by a heavy selloff of its equities after Apple revealed new products. USDKRW failed to close above June highs as KRW continued to be bid following no further escalation of missile tests.


Foreign exchange movement


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The market is buying Kiwi gamma as a poll result shows a tight race between the two participating parties in the NZ election, and AUD gamma is being sold to fund the purchase. 

GBP vols are higher after wage data didn't match up to the good CPI released a day ago, and ahead of a Bank of England meeting today.


Rates
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US Treasury yields inched higher as the expectation of another rate hike by this year has picked up, after Trump urged for faster approval of tax reform.

Core European yields have not changed much, UK gilts couldn’t hold the gain from strong inflation data, due to weak wage increment.


Commodities 

 

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Equities
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US equities nudged higher as the S&P500 remains less than two points below the magical 2,500 level, with the energy sector being one of the better performing sectors.

Centene gained 8% yesterday on synergistic purchase of Fidelis Care as it will provide Centene instant exposure to the New York market. The stock broke the top of its trend channel as it closed at $98.16.

Nordstrom gained more than 6% as the company is close to a deal to go private, with private equity firm Leonard Green & Partners LP to help fund a buyout. Nordstrom gained 6%, up $2.69.

Credit reporting company Equifax, which suffered a massive data breach last week, added to its plunge yesterday with another 14.6% drop. The stock has fallen more than 30% since the data breach which compromised 143 million Americans.


Asia Pacific stocks

Hong Kong 

Analyst Ratings: 

  •  CSC Financial (6066 HK): CSC Financial H Shares New Neutral at Goldman, PT HK$8.50 
  •  China Everbright (165 HK): Everbright Securities A Shares New Neutral at Goldman 
  •  China Galaxy Sec. (6881 HK): China Galaxy Sec. H Shares New Neutral at Goldman, PT HK$7.40 
  •  CITIC Securities (600030 CH): CITIC Securities A Shares New Neutral at Goldman, PT 19.10 Yuan 
  •  Everbright Securities (601788 CH): Everbright Securities A Shares Initiated at Goldman with Neutral 
  •  Fujian Longking (600388 CH): Fujian Longking Cut to Accumulate at Phillip Secs, PT 18.40 Yuan 
  •  GF Securities (000776 CH): GF Securities H Shares Rated New Neutral at Goldman; PT HK$19.40 
  •  Guotai Junan Sec (601211 CH): Guotai Junan Sec A Shares Raised to Buy at Goldman 
  •  Haitong Securities (600837 CH): Haitong Securities A Shares New Neutral at Goldman 
  •  Huatai Securities (601688 CH): Huatai Securities A Shares New Buy at Goldman, PT 24.90 Yuan 
  •  Huatai Securities (601688 CH): Huatai Securities H Shares Rated New Buy at Goldman; PT HK$22 
  •  Mengniu Dairy (2319 HK): Mengniu Dairy Upgraded to Overweight at Morgan Stanley; PT HK$24 
  •  Merchants Securities (3968 HK): Merchants Securities H Shares New Neutral at Goldman, PT HK$15 
  •  Nanjing Iron & Steel (600282 CH): Nanjing Iron & Steel Initiated at GF Secs with Buy 

Preview: 

  •  Baoshan Steel (600019 CH): Xinjiang Ba Yi Plans to Buy 4.35bn Yuan Assets From Parent 
  •  Cathay Pacific (293 HK): Cathay Pacific Confirms Airbus Purchase; Also Alters Orders 
  •  Chalco Plans (2600 HK): Chalco $1.5bn Fund Raising Amid Restructuring Push 
  •  China Resources Cement (1313 HK): China Resources Cement: 9-Month Profit May Rise Significantly 
  •  China Shipbuilding (601989 CH): China Shipbuilding to Buy Stakes in Two Companies 
  •  Guodian Tech (1296 HK): Guodian Technology Unit to Buy Lantian at 48.16m Yuan Consideration 
  •  HSBC (5 HK): HSBC Hires Safonov as Head of EMEA Local Currency Rates, Credit 
  •  HSBC (5 HK): HSBC Bought Back 3.78M Shares at Avg 731.0 Pence Each Sept. 13 
  •  Postal Savings Bank (1658 HK): Postal Savings Bank Gets CSRC Approval for Preference Shares 
  •  SAIC Motor (600104 CH): EU Clears SAIC Motor/Infineon Technologies JV 
  •  Shanghai Fosun Pharma (2196 HK): Shanghai Fosun Pharma Gets FDA Orphan Status for Artesunate 
  •  Weichai Power (2338 HK): China’s Weichai Power to Produce Engines in Belarus With MAZ 
  •  Wynn Macau (1128 HK): Update: Wynn Macau $500M-600M 7Y 4.875-5%, $750M-850M 10Y 5.5% 

Japan

Analyst ratings: 

  •  JFE (5411), NSSMC (5401): Upgraded to overweight from neutral at JPMorgan 
  •  Misumi Group (9962): Raised to outperform from neutral plus at Mito Securities 
  •  Nitta (5186): Cut to neutral from outperform at Tokai Tokyo Securities 
  •  Tosoh (4042): Cut to neutral from outperform at SMBC Nikko 

Preview:

  •  Ain Holdings (9627): Q1 operating profit up 74% y/y to 3.96bn yen 
  •  CRE (3458): Full-year operating profit up 18% y/y to 5.2bn yen, beating co. forecast by 3.8% 
  •  Japan Meat (3539): Full-year operating profit 3.95bn yen vs co. forecast 4.3bn yen 
  •  Kumiai Chemical Industry (4996): 9-month operating profit up 50% y/y to 3.6bn yen, exceeding full-year target of 3.3bn yen 
  •  Orix (8591): US unit buys Lancaster Pollard 
  •  Renesas Easton (9995): Lifts full-year operating profit forecast 23% to 1.6bn yen 
  •  Riskmonster.com (3768): To retire 2.6% of shares on Sept. 29 
  •  Shiseido (4911): To discontinue output, sales of some eyeliners after finding plastic specks 
  •  SYS Holdings (3988): To conduct 2-for-1 stock split on Feb. 1 
  •  Toshiba (6502): Western Digital will continue with arbitration, expressing disappointment after Toshiba said it signed MOU with Bain-led group for sale of chip unit 

Australia

Analyst Ratings: 

  •  BEN AU: Bendigo & Adelaide Raised to Buy at Bell Potter, PT A$12.50 
  •  GMA AU: Genworth Australia IFS Rating Cut to Baa1 From A3 by Moody’s 
  •  HSO AU: Healthscope Raised to Overweight at JPMorgan, PT A$2 
  •  LNK AU: Link Administration Raised to Buy at UBS, PT A$8.85 
  •  SRX AU: Sirtex Cut to Hold at Morgans Financial, PT A$16.53 
  •  WTC AU: WiseTech Cut to Sell at Bell Potter, PT A$8 

Preview:

  •  AGL AU: Turnbull Says Clean Energy Target Must Ensure Reliable Supply 
  •  ASR CN: Alacer Gold Closes Above 50-Day Moving Average in Toronto 
  •  BHP AU: BHP-Vale Brazil Mine Venture Is Said to Project 4Q 2018 Restart 
  •  BLY AU: Boart Longyear Raised to ’CCC+’ from ’SD’ by S&P, Outlook Negative 
  •  MYR AU: Myer to Release Full-Year Earnings 
  •  SUM NZ: Summerset Plans 290-Unit Village in Wellington’s Kenepuru


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A better IEA global forecast pushed WTI crude oil close to the $50 level. 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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