Morning Report APAC: Asia mixed as trade fears continue
- Stocks in Asia fluctuated and US equity-index futures rebounded
- The yen fluctuated ahead of remarks Monday by Bank of Japan
- Oil pares losses in early trading as hedge funds cut bullish bets
By Saxo APAC Sales Trading
Economic data of the day (Singapore Time)
21:00: EC – ECB’s Constancio speaks in Brussels
00:45: EC - ECB’s Praet speaks in Frankfurt
Trade war: The market didn’t react well on the Chinese retaliation of the tariffs and the US equity market dropped 2.2%. Attention now turns to China's Boao Forum, where President Xi Jinping is among senior officials scheduled to speak.
Syria: An alleged deadly chemical attack in Syria thrust the US and Russia into a new confrontation and complicated Trump's aim to pull American troops from the country.
The president warned of a "big price to pay" in response to the strike on rebel-held Douma and denounced Vladimir Putin's support of the Assad regime. Moscow denied the reports and warned a military response would have the "gravest consequences."
NFP: The nonfarm payroll came in much less than expected at 102k (Exp. 188k, Prev. 287k) and unemployment rate at 4.1% (Exp. 4.0%).
The average hourly earnings though was the important one and is moving in the right direction: at 0.3% MoM from +0.1% as expected and 2.7% YoY.
USD seems to be well offered on any equity selloff or at least most of time, against G10 currencies but was as small moved comparatively to equities.
Emerging Markets: USDTRY continues to trade bid (See Friday’s report) but the rest of EM had only small moves with the market still favoring to sell USD on rally.
Foreign exchange movements
US treasuries gained amid stock market sell off on the back of risk-off move sparked by US-China trade tensions escalated and weak payroll data. Powell’s as usual backing of gradual rate hike didn’t help to calm the market.
Core European bonds were higher, helped by US treasuries on the back of poor payroll data. Peripheral underperformed as heavy supply is expected over next few weeks.
US: Dow (-572 points) and S&P 500 (-58 points), stocks fell sharply on Friday as worries of a trade war brewing between the US and China grew.
Wall Street also digested disappointing employment data. Market was hit their session lows in the final two hours of trading — with the Dow falling as much as 767 points — after Fed Chief Jerome Powell indicated the central bank would continue hiking rates this year.
In healthcare space, Incyte Corp (INCY) said its experimental cancer drug failed in a closely watched clinical trial that paired it with Merck & Co.’s Keytruda, striking a blow to combination therapies and sending Incyte and other biotech stocks plummeting Friday. INCY down nearly 23%, last printed 64.02.
Shares of PriceSmart (PSMT), operator of wholesale club stores in Latin America and the Caribbean, rose 5.5% to 88.225 after the company reported fiscal second-quarter results. Revenue increased 5.8% to $839.6 million and net income fell from $27.2 million in the quarter last year to $14.1 million.
Shares of large-cap tech companies also fell. Amazon (AMZN) dropped 3.2% while Apple (AAPL) fell 2.6%. Netflix (NFLX) dropped 1.7% after briefly trading higher. Both AAPL and NFLX reclaimed their 50DMA last week, but couldn’t sustain the growth on Friday.
Micron Technology (MU) nearly gave back all of its stout gains from a 47.08 entry in a double-bottom base. Shares dropped to as low as 47.26 before rebounding.
The memory-chip expert's advance from the proper buy point at one time exceeded 30%. When the gains from a proper breakout hit the 20%-25% level or more, that's a ripe time to lock in at least partial gains. Shares price closed at 48.46, down 1.38, breaking its 50DMA.
Europe: European stock markets closed lower as an escalating trade standoff between the world's biggest economies rattled investors. UK's FTSE down 15 points and Germany's Dax closed negative 63 points.
Europe's auto stocks led the losses, down almost 1.7% amid heightened trade tensions. Schaeffler (SHAF) and Hella (HLE) were among the worst sectoral performers, down 1.33% and 1.57% respectively.
Among big commodity name, with their heavy exposure to China — were among the worst performers, down 1.6%. Rio Tinto (RIO) was among the hardest hit after Exane BNP Paribas cut its stock recommendation to a "neutral" from "outperform."
Shares of the mining giant were off more than 2.3 percent on the news. While Glencore PLC shed 2.1% and BHP Billiton PLC (BLT) dropped 1.5%.
Dufry (DUFN) was among the top performing European stocks, after the firm proposed a dividend and announced it would launch a share buyback plan. Kepler Chevreux then upgraded its target price for the Swiss travel retailer shortly after the opening bell, supporting a move higher. Shares of Dufry were up 3%.
Hong Kong: Hang Seng Index (HSI) gained 326 points or 1.1% to 29,844, after US President Donald Trump reportedly said he had instructed US trade officials to mull US$100 billion more tariffs on Chinese imports. HSI enjoyed wilder swing to 461 points at most to peak at 29,980.
Technologies and software stocks rebounded. Tencent (700.HK) leaped 2.1% and closed at $405.8, still trading below its 100DMA of 425.90, while Sunny Optical (2382.HK) mounted 1.8%. Chinese financials hiked steeply. Ping An (2318.HK) and China Life (2628.HK) added 1.6% and 1.3%. ICBC (1398.HK) and CCB (939.HK) lifted 0.8% and 1.5% respectively.
China Mobile (941.HK) last traded at 71.55, company was granted FDD Operation Licence, which would help the company boost future network competitiveness in long-run. The frequency spectrum was expected to be 900MHz. IoT development would accelerate on the FDD network to be established by CHINA MOBILE nationwide.
– Edited by Adam Courtenay
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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