Article / 04 April 2018 at 3:13 GMT

Morning Report APAC: Asia starts strong on US lead

APAC Sales Trading Desk / Saxo Capital Markets
Singapore

 

  • 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 dayxxx

 



















Speeches


21:45: US – FED’s Bullard speaks on US economy and monetary policy
23:00:US – Fed’s Mester speaks on diversity in economics

Overnight news

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.


Foreign exchange

xxx
 















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
xxx
 
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.


Rates

xxx













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. 
 
Commodities


xxx
 

 

 







Equities

xxx
 
















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
 xxx

Taking the overseas lead, Asia shares are expected to start strongly today. Photo: Shutterstock

 

– Edited by Adam Courtenay


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