Today's edition of the Saxo Morning Call features the SaxoStrats team discussing the continuing weakness of the US dollar as commodity prices recover ground and in the wake of key US equity indices hitting all-time highs Thursday.
Article / 05 April 2018 at 1:55 GMT

Morning Report APAC: Asia swings higher on US gains

APAC Sales Trading Desk / Saxo Capital Markets


  • Japanese shares lead early gains in the region and Aussie equities also rise
  • Big US index swings, with the S&P making a loss then closing up 1.2%
  • Oil pares its losses after a larger-than-expected drop in crude stockpiles

By Saxo APAC Sales Trading

Economic data of the day (Singapore Time)




April 6: 01:00 (US) Federal Reserve's Bostic speaks on financial literacy

Overnight news

America: An initial very risk-off tone that gripped markets in the wake of the reciprocal tariffs from China eased and turned positive as the US appeared to back away from the harshest of risks with commerce secretary Wilbur Ross saying the goal is negotiation.

New Chief Economic Advisor Larry Kudlow added that the tariffs from Trump are just proposals and that they may be tools for negotiation. This message from deep within the White House appeared to calm market nerves that the worse of trade tension fears may subside.

Positive momentum seems to be gathering on NAFTA with a meeting set to take place in Washington next week. Headlines from NAFTA members seemed to indicate that a deal was near.

US economic data  was at the margin slightly softer with the exception of the ADP numbers. US ADP 241,000 versus 210,000 expected, with prior month upward revisions.

Services and comp PMI declined to 54 and 54.2 from 54.1 and 54.3 respectively. ISM Non-Manufacturing fell from 59.5 to 58.8, below 59 estimates.

Factory orders rose 1.2%, but well below estimates of 1.7% while durable goods increased 3%, down from 3.1% prior.

Fed’s Bullard sees 2.5% GDP this year and 2.2% next. He is concerned about the escalation in trade tensions, which will impact his outlook but agrees China has not played fair.
EU CPI data will embolden the doves as headline in line at 1.4%, but prior month revised down to 1.2%. Core however missed with a print of 1.0% below the 1.1% expected and in line with prior month.

EU unemployment fell to 8.5% from 8.6% in line with expectations. This is the lowest since 2015 but still well above the lows pre-GFC. 

Foreign exchange



USD: Generally weaker with the risk on tone in the markets, the safe haven currencies like JPY and CHF however underperformed.

NZD: The best G10 performer overnight with no obvious catalyst with the exception of the strong milk auction late on Tuesday. 

CAD: Continues to be buoyed by the positive NAFTA news retracing all of the ground it lost in early March.

Emerging Markets: Positive NAFTA momentum continues to push USDMXN lower, MXN +0.7% on the day. Rest of EM was a bit missed and muted with respect to other asset classes.

Foreign exchange movements

Despite the risk off mode early yesterday and the subsequent rally, levels of volatility continue to come off.

NZD spot has moved a lot but vols remain muted.Overnight in CNH there was a spike in spot and a squeeze in gamma but  this was localised to the front end of the curve.



US treasuries paired early gains on stocks sell off, as US toned down on the tariffs after China’s retaliation and more signals on negotiation were released to the market.

European bonds closed before unveiling of market optimism, and mostly supported by risk off flows. Peripherals outperformed led by Italy, which recently being bought at times of risk.









US: Dow (+230 points) and S&P 500 (+30 points) stocks make a comeback, Dow rallies more than 700 points from lows of the day.

The S&P 500 erased a 1.6% decline to finish the session 1.2% higher at 2,644.69, led by gains in consumer stocks. The broad index also closed back above its 200-day moving average, a key technical level.

Boeing (BA) skidded 4.1% lower as investors tried to gauge how hard a hit the jet maker might take in the escalating trade war with China.

The largest US exporter could potentially lose ground to European rival Airbus (EADSY) as a result of China's 25% levy. Boeing shares have been consolidating since early March, and are in their fourth week below their 10-week moving average.

Major component Caterpillar (CAT) careened 3.3% lower. The heavy equipment maker is not the direct target of any tariffs, but is in a deepening battle against China's domestic equipment makers. The stock ended Tuesday 16% off its January high, and tracking toward a test of support at its 200-day moving average.

In auto space, Tesla Inc (TSLA) tanked 3.9% at the start of trade, chalking up the heaviest early loss among Nasdaq 100 stocks.

China included electric cars in its tariff targets. That puts Tesla at a particular disadvantage because, unlike General Motors (GM) and Ford (F), Tesla does not produce any vehicles in China and its entire inventory there is imported.

Tesla shares dropped 22% in March, and ended Tuesday 31% off their September high. Shares price closed off well up 7.26% to 286.94.

Europe: European stock markets closed lower, amid elevated concerns of a tit-for-tat trade war between the world's biggest economies.

The UK's FTSE positive 3.55 points and Germany's Dax closed negative 44 points. Investors initially dumped so-called risk assets such as equities as tensions between China and the US over trade issues stepped up, but the selling eventually abated and some sectors saw gains.

Mining stocks were among those dragged lower in London, as this industry is sensitive to development in China, a major buyer of industrial and precious metals. Shares of Anglo American PLC shares (AAL) fell 3.2%, Rio Tinto PLC (RIO) lost 2.6% and BHP Billiton PLC (BLT) gave up 2.5%.

Car makers were under pressure as well due to global trade tension. Germany’s BMW slid 1.4%. Daimler AG (DAI) fell 0.7% and Volkswagen (VOW3) down 0.5%. Fiat Chrysler (FCA) was off 0.5% as well following the jump of 7.3% the previous day after FCA’s post a 14% rise in March sales.

Hong Kong: Hang Seng Index (HSI) decline 661 points, ahead of Qingming Festival holiday, Hong Kong stocks failed to sustain the rebound index closed 29,518. As China released a retaliating list of US imports that it targets to hit tariffs.

Tencent (700.HK) plunged 2.9%, missing $400, last traded at $397.60. Technology, handset equipment and consumption stocks came under pressure.

AAC TECH (2018.HK) collapsed 5.9%, being the worst performer of blue chips.

Key blue chips HSBC (5.HK), HKEX (388.HK) and AIA (1299.HK) lost 1.5%-1.6%.

China Mobile (941.HK) fell notably, down 2.9%. On earnings, Lenovo (992.HK) announced the third-quarter results as of the end of December 2017.

The company reported a loss of $289 million, against a profit of $98 million in the same period of last year. Credit Suisse had expected the company's loss during the quarter to be $147 million. Share closed off -1.7% to $4.06.

 A seeming about-face by the US president has lit a fire under global shares. 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 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.

Copyright | Disclaimer | Risk Warning | Privacy Policy | Contact Us
Samsung Hub | 3 Church Street | # 30-01 | Singapore 049483
Company No. 200601141M

Anatoly Vyacheslav Anatoly Vyacheslav
This comment has been redacted


The Saxo Bank Group entities each provide execution-only service and access to permitting a person to view and/or use content available on or via the website is not intended to and does not change or expand on this. Such access and use are at all times subject to (i) The Terms of Use; (ii) Full Disclaimer; (iii) The Risk Warning; (iv) the Rules of Engagement and (v) Notices applying to and/or its content in addition (where relevant) to the terms governing the use of hyperlinks on the website of a member of the Saxo Bank Group by which access to is gained. Such content is therefore provided as no more than information. In particular no advice is intended to be provided or to be relied on as provided nor endorsed by any Saxo Bank Group entity; nor is it to be construed as solicitation or an incentive provided to subscribe for or sell or purchase any financial instrument. All trading or investments you make must be pursuant to your own unprompted and informed self-directed decision. As such no Saxo Bank Group entity will have or be liable for any losses that you may sustain as a result of any investment decision made in reliance on information which is available on or as a result of the use of the Orders given and trades effected are deemed intended to be given or effected for the account of the customer with the Saxo Bank Group entity operating in the jurisdiction in which the customer resides and/or with whom the customer opened and maintains his/her trading account. When trading through your contracting Saxo Bank Group entity will be the counterparty to any trading entered into by you. does not contain (and should not be construed as containing) financial, investment, tax or trading advice or advice of any sort offered, recommended or endorsed by Saxo Bank Group and should not be construed as a record of ourtrading prices, or as an offer, incentive or solicitation for the subscription, sale or purchase in any financial instrument. To the extent that any content is construed as investment research, you must note and accept that the content was not intended to and has not been prepared in accordance with legal requirements designed to promote the independence of investment research and as such, would be considered as a marketing communication under relevant laws. Please read our disclaimers:
- Notification on Non-Independent Invetment Research
- Full disclaimer

Check your inbox for a mail from us to fully activate your profile. No mail? Have us re-send your verification mail