Morning Report APAC: Asia starts strong on US lead
- No ongoing conversations within the White House pertaining to actions on Amazon.
- Renewed optimism over the prospects of a positive outcome for NAFTA
- CAD the best performing currency as traders position for a positive NAFTA outcome
By Saxo APAC Sales Trading
Economic data of the day
21:45: US – FED’s Bullard speaks on US economy and monetary policy
23:00:US – Fed’s Mester speaks on diversity in economics
AMERICA: US stocks bounced overnight as a Bloomberg report suggested that there are no ongoing conversations within the White House pertaining to actions on Amazon. This caused Amazon to regain some of its lost ground.
The US released its list of tariffs it will place on China with a firm focus on targeting key tech sector’s China sees as strategic. China has warned it will respond with reciprocal tariffs.
There was renewed optimism over the prospects of a positive outcome for NAFTA which saw MXN and CAD perform strongly on the day.
John Williams currently the head of San Francisco fed was appointed to the role of Chairman of the NY Fed to replace Dudley when he retires in June.
Kashkari said that US tax cuts had been positive for businesses near term but didn’t see it as changing investment yet.
Brainard laid out concerns with regards to trade policy at present.
EUROPE: European manufacturing PMIs showed that peak momentum may be behind them as the strength in the EUR starts to weigh on manufacturing optimism.
USD: A mixed session for the USD which regained some ground against safe haven currencies but lost against key trading partners. CAD: The best performing currency as traders position themselves for a positive outcome in the upcoming NAFTA negotiations. MXN also performed, but by less.
NOK: rebounded after what had been a tough few days for the NOK. The positive shine from the Norges hawkish tone seemed to have come off the NOK, yesterday however it regained some ground.
Emerging Markets: Very much a treading water type of session within the EM space with moves largely within their defined ranges and limited. Some notable exception ins Latam with BRL falling 0.9% and COP rising 0.5% making up the full extent of the EM excitement.
Foreign exchange movements
USDJPY vols have retreated somewhat in sympathy with the risk bounce overnight and supporting the spot price action.
EUR vols static as the pair trades in the range. A generally quiet FX session feeding into how vols traded.
US yields were higher as “risk on” fuel buying of stocks and fixed income after white house indicate that they are not after Amazon.
Core European bonds closed with little change, first day after Easter holiday. Peripherals underperformed.
US: Dow (+389 points) and S&P 500 (+32 points), stocks rose on Tuesday as technology shares cut sharp losses, following a volatile session that saw major indexes fluctuate widely as investors digested a sharp move lower in the previous session and gauged the likelihood of both trade risk and further weakness in technology names.
The “FAANG”s and Amazon (AMZN) were in focus after their sharp losses. Amazon closed up 1.5% at $1,392.05, but trading was volatile after the latest in a series of Trump tweets against the company – “I am right about Amazon costing the United States Post Office massive amounts of money for being their Delivery Boy. Amazon should pay these costs (plus) and not have them bourne by the American Taxpayer. Many billions of dollars. P.O. leaders don’t have a clue (or do they?)!”
Netflix gained 1.2%. Alphabet rose 0.6% and Apple added 1%. Facebook rose 0.5% after previously having fallen as much as 2%.
In its high-profile market debut, digital music provider Spotify Technology SA closed at $149.01, 12.9% higher than the $132 reference price set by the NYSE late on Monday, though well below its intraday high of $169 and its opening price of $165.90.
In auto space, Tesla Inc (TSLA) shares gained 6% after the electric automaker said it need not raise more capital this year and announced robust production numbers for its cheaper Model 3 sedans.
While General Motors Co (GM) rose 3.3% after reporting its March sales figures. It also said it would cease to report monthly sales in the future. Ford Motor Co (F) rose 2.7% after reporting its own March sales.
Europe: European stock markets losed lower Tuesday amid continued fears of a potential trade war and regulation for the technology sector. U.K.'s FTSE down 26 points and Germany's Dax closed negative 94 points.
Technology stocks were among the worst performers, continuing the bearish sentiment seen on Wall Street. Market players fear that there will be new and tougher rules on the sector after a data scandal involving Facebook. Furthermore, Apple is reportedly looking at making its own chips for Mac computers which hit the stocks of European chipmakers. Austria Microsystems (AMS), an Apple supplier, saw shares over 2% lower to CHF 97.58.
Anglo American PLC shares (AAL) fell 1.3%, with the miner saying it has suspended operations at its Minas-Rio iron-ore project in Brazil after finding a minor leak in a pipeline.
In corporate news, Air France (AF) is expected to operate about 75% of its flights as its workers go on strike Tuesday. The strike will also affect the rail network. Air France shares were more than 4% lower to EUR 8.616.
Hong Kong: Hang Seng Index (HSI) rebounded 86 points or 0.3% to 30,180. Dampened by technology stocks, two major oil stocks, HKEX, traditional banks and Chinese insurers, Hang Seng Index retreated 338 pts at most to bottom at a 1.5-month low of 29,755. It later received support, and last traded at 29,888, down 204 pts or nearly 0.7%.
Sinopec Corp (386.HK) surged 3.6% to 7.14. Chinese consumers also saw a hike. MengNiu Dairy (2319.HK) leaped 3.7% and hit new-highs. Hengan Int’l (1044.HK) soared 8.3% and became the best-performing bluechipper. It surpass all of the four MAs (50MA and 100MA: $75.61 and $77.81).
It last posted at $77.8, up 7%, on volume of 3.04 million shares. In its early research report, Deutsche Bank had said the management of Hengan forecast sales growth target to reach double digit this year.
Handset equipment stocks were subdued on rumours that the US is posing tariffs on the PRC's technological products. AAC Tech (2018.HK)and Sunny Optical (2382.HK) respectively slid 1.6% and 3.5%, with the latter as the worst-performing blue-chipper
Taking the overseas lead, Asia shares are expected to start strongly today. Photo: Shutterstock
– 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
All material contained herein is provided for your general information. The information and commentaries are not intended to be and do not constitute financial advice, investment advice, trading advice or any other advice or recommendation of any sort offered or endorsed by Saxo Capital Markets Pte. Ltd. (“SCM SG”). Any expression of opinion (which may be subject to change without notice) is personal to the presenter and/or author; they do not reflect the view or opinion of SCM SG or its affiliates, neither do they constitute an endorsement of SCM SG’s view or analysis of the same.
None of the information contained here constitutes an offer to purchase or sell a financial instrument, or to make any investments. SCM SG does not take into account your personal investment objectives or financial situation and makes no representation and assumes no liability as to the accuracy or completeness of the information nor for any loss arising from any investment based on any commentaries or information provided here.
For further information, please click here.
Saxo Capital Markets Pte Ltd ("Saxo Capital Markets") is a licensed subsidiary of Saxo Bank A/S, an online trading and investment specialist. Saxo Capital Markets serves as the APAC headquarters and holds a capital markets services licence under the Monetary Authority of Singapore; and a commodity broker licence issued by the International Enterprise Singapore. Clients can trade Forex, CFDs, Stocks, Futures, Options and other derivatives via SaxoWebTrader and SaxoTrader, the leading multi-asset online trading platforms.
Trading risks are magnified by leverage - losses can exceed your deposits. Trade only after you have acknowledged and accepted the risks. You should carefully consider whether trading in leveraged products is appropriate for you based on your financial circumstances. Please consider our Risk Warning and General Business Terms before trading with us. Please see full General Disclaimer.
Thousands of serious traders receive free news and analysis from Saxo Capital Markets each day. Saxo Capital Markets never sends these emails unsolicited; they are sent following acceptance of your membership and subscription request by Saxo Capital Markets at saxomarkets.com.sg. If you do not wish to receive any emails from Saxo Capital Markets in the future, please reply to this email with the word "UNSUBSCRIBE" in the subject header.
Samsung Hub | 3 Church Street | # 30-01 | Singapore 049483
Company No. 200601141M