Article / 07 November 2017 at 1:48 GMT

Morning Report APAC: Asia shares rise as Trump makes mark

APAC Sales Trading Desk / Saxo Capital Markets


  • MSCI’s Asia-Pacific index edges up 0.2% in early trade
  • Oil comes slightly off the boil, after breaking $56/b overnight
  • The USD edged up 0.1% against the yen to 113.76
  • Investors digesting inflation comments from Bank of Japan

By Saxo APAC Sales Trading

Economic data of the day (Singapore Time)


Speeches (Singapore Time)
1700: EC - ECB's Draghi, Lautenschlaeger, Nouy Speak in Frankfurt
0000: FR - Bank of France's Villeroy speaks at Jeco in Lyon
0135: US - Fed's Quarles Speaks at Clearing House Conference
0155: CA - Bank of Canada's Stephen Poloz Speech in Montreal
0230: UK - Bank of England's Taylor Speaks in London

Overnight news

US: President Donald Trump and Japanese Prime Minister Shinzō Abe presented a unified front against North Korea’s regime Monday, putting increased pressure on Pyongyang to abandon its nuclear weapons program.

“The era of strategic patience is over,” Trump said during a joint press conference with Abe.

“We are together 100 percent,” Japan’s Prime Minister vowed. “Now is the time not for dialogue, but for applying a maximum level of pressure on North Korea,” Abe said, urging China to do more to hobble Pyongyang’s nuclear ambitions.

Oil traded near the highest close in more than two-years after Saudi Arabia’s King Salman ordered the arrest of ministers and princes during an anti-graft drive
Apple offered $7 billion of debt to help fund its $300 billion capital return program. The iPhone maker is selling bonds in as many as six parts, even as potential tax reform could leave it awash in cash from overseas. The longest portion it's set to sell is $1.25 billion of 30-year securities that may yield 1 percentage point more than Treasuries.

Apple has $246 billion sitting overseas but they still issue debt in the US. Why? because it’s cheap, can get them cash to invest in capex onshore and as long as the tax reforms are not clear, don’t expect the $246bn to come back anytime soon to the US.

What does it mean for equities? it can go much much higher and all those calling for the end of the rally in equities, need to get ready to wait a bit longer.

Foreign exchange



US 10 year rates can’t really hold above 2.40% and the curve is flattening with the 5yr-30yr spread touching 80.7 basis points, the lowest level since 2007.

This market behaviour can’t sustain a strong USD risk for too long and this is what is happening now with offers coming back in the market.  

DXY is still trading above the broken H&S at 94.00 but the trade is not performing and there is a risk to see the market losing patience and testing the support at 94.00 before we see it rally again.

GBPUSD was the best performer on very low liquidity and some short squeeze. The pair has been supported at the 100 Day Moving Average support since April.

USDJPY is supported but can’t break 115 and won’t if US rates can’t manage to rally. The market is definitely long with a lot of buyers lately of upside.

The big level to watch will be the 200 DMA at 111.74.

Emerging markets: Good luck if you are trading USDBRL which moves almost 2% every day. The spike in oil overnight helped this time BRL rally.

In the meantime, while no one really talks about it, USD/Asia is testing the lows of the year. Talk about a strong USD rally. USDKRW is trading at 1110, very close to break the lows of the year.

Foreign exchange movements

The USD can’t really rally as equities are still performing. Apple is issuing $7bn of debt, $1.25bn being in 30-year Friday so there is no particular reason to see vol pick up and gamma is very well offered globally.

As an example of that, EURUSD 1M ATM is trading at 5.6, the lowest since 2014.


US treasuries advanced with yield curve flattened, caused mainly by Fed rate increasing waning off and global pension fund demand for US duration.

Core European bonds climbed amid scarce supply outlook for the week, as shown by ECB PSSP data that maturity in most countries are increasing. Portuguese continue to outperform.





The three major US indices finished at all-time highs for the 26th time in 2017, the most ever records in a year, as bolstered by robust corporate earnings and $130 billion mega-merger talks between chip makers Broadcom and Qualcomm.

Michael Kors Holdings jumped 15% after the luxury fashion company’s reported adjusted earnings-per-share were $1.33, above the consensus of 83 cents and revenue that beat forecasts. Michael Kors also raised its 2018 profit and revenue outlook.

Sprint fell 12% after the company, along with T-Mobile slumping 5.7% announced on Saturday, that merger talks had ended.

SBM Offshore plunged 14% after the Netherlands-based oil-services company said it has made a provision of $238 million against issues in the U.S. related to potential improper sales practices.
Asia Pacific ctocks
Hong Kong

Analyst ratings
-          China Airlines (2610 TT): China Airlines Cut to Neutral at Credit Suisse; PT NT$12.70
-          Datang Power (991 HK): Datang Power H Shares Upgraded to Outperform at CLSA
-          Huadian Power (600027 CH): Huadian Power H Shares Raised to Buy at CLSA; PT Set to HK$3.90
-          Huaneng Power (902 HK): Huaneng Power H Shares Raised to Outperform at CLSA; PT HK$5.70
-          MGM China (2282 HK): MGM China Downgraded to Hold at Morningstar
-          PetroChina (857 HK): PetroChina H Shares Upgraded to Buy at DBS Vickers; PT HK$6.50
-          Sinopharm (1099 HK): Sinopharm H Shares Initiated at Hua Tai Securities With Buy
-          Bank of China (3988 HK): Bank of China to Shift Vietnam, Philippine Businesses to BOCHK
-          China Comm Cons (1800 HK): CCCG Overseas Real Estate Markets $150m Loan
-          Citic Bank (998 HK): StormHarbour Hires Ching in Asia for Origination, Structuring
-          CITIC Securities (600030 CH): Citic Securities Buys 6.5% Stake in CITIC Futures Subsidiary
-          Esprit Holdings (330 HK): Esprit 3-Month Revenue HK$4.01B vs HK$4.11B Year Ago
-          Geely Auto (175 HK): Geely Auto Oct. Sales Volume Rises 30% Y/y to 125,118 Units
-          Glencore (GLEN LN): Orocobre, China Moly Among Expected Winners from EV Growth: Citi
-          Great Wall Motor (2333 HK): Great Wall Motor Oct. Sales Volume 108,008 Units
-          Haier Electronics (1169 HK): Qingdao Haier Offers HK$8b of Exchangeable Bonds: Terms
-          Kweichow Moutai (600519 CH): Moutai Sees at Least 7.7% Increase in 2018 Core Products Sales
-          PetroChina (857 HK): Petroecuador CEO Byron Ojeda Resigns, Spokesman Says
-          PetroChina (857 HK): Ecuador to Require $8.25B New Debt in 2018: De La Torre
-          Poly Real Estate (600048 CH) Oct. Contract Sales Value Rises 84.5% Y/y
-          Pudong Bank (600000 CH): PRICED: Guotai Junan $300m 364-Day Bond at 2.8%
-          Tencent (700 HK): China is Finally Going After Click Farms and Fake Online Sales
-          Tencent (700 HK): WeChat Began Censoring Words a Year Before Congress: Citizen Lab
-          Zhejiang Huahai Pharma (600521 CH): Huahai Buys $30M Equity Stake in Eutilex, Gets Licensing Rights
Analyst ratings
-          Escrow Agent Japan (6093): Rated new outperform at Tokai Tokyo
-          Furukawa Electric (5801): Cut to neutral from strong outperform at Tachibana Securities
-          Kao (4452): Cut to neutral from outperform at Daiwa
-          Kyocera (6971): Upgraded to outperform from neutral at Tokai Tokyo
-          Murata (6981): Cut to neutral plus from outperform at Iwai Cosmo
-          Nomura Holdings (8604): Upgraded to buy from outperform at Daiwa
-          Sapporo (2501): Cut to neutral from buy at Mizuho
-          Screen Holdings (7735): Raised to buy from hold at Jefferies
-          ABC-Mart (2670); Oct. same-store sales +2.5% y/y
-          Aiful (8515): Prelim. 1H net income 3.4b yen vs co. forecast 2b yen
-          Benesse (9783): 1H operating profit +45% y/y to 11.6b yen
-          Capcom (9697): 1H operating profit 5b yen vs 1.72b yen year ago
-          Disco (6146): 2Q operating profit 13.8b yen vs analyst est. 12.3b yen; lifts 9- month outlook
-          Don Quijote (7532): 1Q operating profit +14% to 14.3b yen; lifts 1H and FY forecasts
-          Funai Electric (6839): Prelim. 1H operating loss 4b yen vs co. forecast 600m yen profit
-          GMO internet (9449): 9-month operating profit -7.6% y/y to 12b yen
-          Isuzu Motors (7202): Raises full-year operating profit forecast 7.9% to 164b yen
-          Japan Steel Works (5631): Lifts full- year operating profit forecast 29% to 18b yen
-          Keihin (7251): Raises full-year operating profit forecast 13% to 22.5b yen
-          KLab (3656): Boosts full-year operating profit outlook to 4.3b yen from range of 2.2b-4b yen
-          Mitsubishi Estate (8802): Boosts full- year operating profit forecast 5.1% to 205b yen
-          Nissan (7201): To restart Japan production today
-          SoftBank (9984): 2Q operating profit 395.6b yen vs analyst est. 322b yen; says Sprint is "strategically invaluable"
-          Sumitomo Corp. (8053), SMFG (8316): Agree on capital injection of up to $1b into SMBC Aviation Capital; will reorganize holdings in Sumitomo Mitsui Finance & Leasing so that each company holds 50%
-          Tokyo Tatemono (8804): 9- month operating profit -12% y/y to 19.8b yen

Analyst ratings
-          Crown Resorts (CWN AU): Downgraded to Hold at Morningstar
-          JB Hi-Fi (JBH AU): Upgraded to Neutral at JPMorgan; PT A$23
-          Magellan Financial (MFG AU): Raised to Outperform at Credit Suisse
-          Orica (ORI AU): Downgraded to Sell at Goldman; PT A$16.19
-          Platinum Asset (PTM AU): Upgraded to Neutral at Credit Suisse; PT A$7
-          South32 (S32 AU): Cut to Sell at Deutsche Bank; PT Set to 1.70 Pounds
-          Super Retail (SUL AU): Upgraded to Neutral at JPMorgan; Price Target A$8
-          Westpac (WBC AU): Downgraded to Neutral at Credit Suisse; PT A$33.50

-          BHP Billiton (BHP AU): Hedge Funds Bail on Copper as Codelco, BHP See Lasting Rally
-          Costa Group (CGC AU): May Be Set For Earnings Upgrade at Annual Meeting Next Week: Australian
-          Newcrest (NCM AU), Northern Star (NST AU), Evolution (EVN AU), Saracen (SAR AU), Regis Resources (RRL AU), Resolute Mining (RSG AU), OZ Minerals (OZL AU): PRECIOUS: Gold Rises Most in Six Weeks Amid Saudi Arabia Jitters
-          Orocobre (ORE AU): Among Expected Winners from EV Growth: Citi
-          Rio Tinto (RIO AU), Fortescue (FMG AU): Iron Ore Rallies as Investors Assess Shifting Currents in China
-          Whitehaven (WHC AU): To Buy Idemitsu’s 30% Stake in Tarrawonga Mine
-          Woodside (WPL AU): Woodside Recent Share Price Gains Could Prompt Shell Exit: AFR; NOTE: Top holders
-          WorleyParsons (WOR AU), Oil Search (OSH AU), Beach Energy (BPT AU), Karoon (KAR AU), Origin Energy (ORG AU), Santos (STO AU): Oil Pierces Two-Year High as Saudi Roundup Rattles Markets
-          Bank of New York Australia ADR Index is down 0.3% to 275.4
-          BHP Billiton ADRs are up 3.2% to A$28.29 equivalent, a 2.3% premium to last Sydney close
-          Rio Tinto ADRs are up 2.3% to A$65.52 equivalent, a 10.5% discount to last Sydney close
-          Companies trading above 20/50/200 DMAs, Bollinger upper band with RSI above 70: APA, BRG, CCP, CGC, CHC, CIM, CSL, IAG, LNK, MND, MTR, ORE, RIO, SDA, WPL
-          Companies trading below 20/50/200 DMAs, Bollinger lower band with RSI below 30: AMC, HT1, MYX
 Trump and Japan have little to quarrel about when it comes to North Korea. Photo: Shutterstock

– Edited by Adam Courtenay

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