Article / 15 September 2017 at 1:55 GMT

Morning Report APAC: Asia unfazed by N Korea move

APAC Sales Trading Desk / Saxo Capital Markets
Singapore

 

  • Equities in Tokyo trade sideways, as market ignores missile
  • Havens assets such as JPY and gold favoured in early trade
  • Dollar Spot Index fell 0.1% after a 0.3% drop on Thursday
  • Gold rose around 0.2% to $1,332.43/oz overnight
  • Bitcoin value slumps after Chinese exchange drops trades

By Saxo APAC Sales Trading


Economic data of the day (Singapore Time)
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Speeches

1650: UK – BOE’s Vlighe speaks in London
0100: IT – Bank of Italy governor Visco speaks in Assisi

Overnight news

Bitcoin: One of the biggest bitcoin online exchanges in China, BTC China, has confirmed that it will immediately stop accepting new accounts and stop trading on September 30. The bitcoin price slumped 13% and this had been a fifth day’s decline, amid the Chinese government’s ongoing regulation on cracking down on virtual currencies. China accounts for about one quarter of bitcoin trading in the world. 

US: US inflation is moving toward the Fed’s target and the job market remains robust. CPI inflation in August was modestly stronger than expected at 0.4% m/m and 1.9% y/y. Core rose 0.2% m/m and 1.7% y/y. Jobless claims surprisingly dropped despite destruction caused by hurricanes. 

UK: The Bank of England held its rates with 7-2 in MPC votes, however it is undoubtedly hawkish and indicated that a rate hike on the table, soonest by November. It indicates that inflation could become a primary risk to the economy and endorsed the view that tapering may be necessary.


Foreign exchange

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AUD: employment number change came in much better than expected as AUDNZD traded 100 pips higher but faced resistance at 1.11 key psychologically resistance level.

The hourly chart saw overhead selling pressure and is likely the oceanic pair is likely to be kept at 1.10.

GBPUSD traded at around $1.34, its highest since September 2016, on the back of a hawkish Bank of England. As GBPUSD heads to fresh new high by the close of the week, we favour the momentum higher and possible buy on dip.

The USD nudged higher intraday receiving support from good CPI and jobless claim data, but still closed slightly in the red on possible profit taking as the downtrend ensues.

Emerging markets: Yuan was bid higher in the day both onshore and offshore after PBOC lower daily fixing and weak industrial production data in China. USDKRW was on the bid amid new information on North Korea threatens to sink Japan with nuclear bomb.

Foreign exchange movements

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Market is buying dollar into 25 September announcement of tax reform plan. Dollar pairs are seeing vols picked up with the time span. 

Cable short dated is seeing buying of gamma on the back of Hawkish BOE. Kiwi and AUD volatilities dropped as markets giving less concerns on New Zealand election.

Rates

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US yields was boosted by better CPI data less than expected jobless claim, however it didn’t last into close as there is new possibility of North Korea missile launch.

UK yields ended much higher on the back of hawkish Bank of England. It is indicated that rate hike is in the cards for BoE, earliest by November this year.

Commodities 

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Equities
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The Dow Jones closed at a record for a third session in a row even as the broader market sagged on the back of weak retail shares, as dragged down by with Tiffany (-4.8%) after news broke that Qatar's sovereign wealth fund sold a large block of shares.

Equifax dropped 2.4%, extending the huge selloff sparked by its disclosure last week of a massive data breach and the FTC on Thursday said it was opening an investigation into the breach.

European stocks edged up to a five-week high in a choppy session, boosted by energy stocks and retailers, but with gains capped as the Bank of England hinted rates could rise in coming months.

Munich Re AG ticked up 0.1%, erasing an earlier loss after the world’s largest reinsurer—said it could miss its 2017 profit target and potentially post a loss because of the impact from Hurricanes Harvey and Irma.

Asia Pacific Stocks
 

Hong Kong
 
Analyst ratings:
-          Aisino (600271 CH): Aisino Downgraded to Neutral at UBS; PT Lowered to 21 Yuan
-          China Gas (384 HK): China Gas Downgraded to Sell at UBS; PT Raised to HK$20
-          China Life (601628 CH): China Life A Shares Cut to Neutral at Macquarie, PT 30 Yuan
-          Henderson Land (12 HK): Henderson Land Upgraded to Neutral at Credit Suisse; PT HK$54.70
-          New China Life (601336 CH): New China Life A Shares Cut to Underperform at Macquarie
-          SHK Properties (16 HK): SHK Properties Raised to Neutral at Credit Suisse, PT HK$136.30
-          Weichai Power (2338 HK): Weichai Power Jumps as Morgan Stanley Lifts PT by 31% on Outlook
 
Preview:
-          Agile Group (3383 HK): Agile Group Plans Spin-Off and Listing of Unit in Hong Kong
-          Air China (601111 CH): Air China August Passenger Traffic up 2.4%, Capacity up 4.5%
-          BAIC Motor (1958 HK): ZF to Start Making E-Car Parts for China’s BAIC Under JV Pact
-          BOC Aviation (2588 HK): BOC Aviation Says It Sold Six Aircraft to Leasing Company
-          China Comm Cons (1800 HK): Ivory Coast’s Abidjan Port Seeks to Double Traffic by 2023
-          Everbright Securities (601788 CH): Sun Hung Kai Financial Increases 3Y Loan to HK$4.5b
-          HSBC (5 HK): HSBC Bought Back 3.89M Shares at 728.27 Pence Each Sept. 14
-          Oceanwide (000046 CH): Virginia Approves China Oceanwide Acquisition of Genworth
-          Red Star (1528 HK) : Red Star Macalline $300m 5Y Bond +175bp Area
-          Sinopec (386 HK): Sinopec Chairman Is Said To Prepare Move to Run Work Safety Body
-          Standard Chartered (5 HK): Standard Chartered Hires Private Bankers For China, North Asia
-          SHK Properties (16 HK):SHK Properties Full Year Underlying Profit Beats Estimates
-          Tencent (700 HK): Nintendo’s Switch Adds Adaptation of Tencent’s Honour of Kings
-          ZTE (763 HK): Netas Right to Exit Price to Be Based on $3.0801 Per Share

Japan
 
Analyst ratings:
-          Iriso Electronics (6908): Cut to equalweight from overweight at Morgan Stanley MUFG
-          Konica Minolta (4902): Raised to overweight from neutral at JPMorgan
-          Oji Holdings (3861): Cut to outperform from strong outperform at Tachibana Securities
-          Pigeon (7956): Raised to outperform from neutral at Tokai Tokyo Securities
-          Tokyo Century (8439): Cut to neutral from outperform at Tokai Tokyo Securities
Preview:
-          Airlines, travel: Japan, India sign open skies agreement covering main airports
-          Askul (2678): 1Q operating profit drops 5% y/y to 1.2b yen, keeps full-year forecasts unchanged
-          Astellas (4503): Xtandi combo with anti-hormone therapy meets primary goal in late stage prostate cancer trial; Evercore ISI says market maydouble
-          Chugai Pharma (4519): FDA approves Amgen/Allergan’s biosimilar to Avastin
-          Eiken Chemical (4549): Lifts 1H operating profit forecast 63% to 2.3b yen
-          JGC (1963), Marubeni (8002): Agree to modernize parts of Abadan oil refinery in Iran
-          Lixil Group (5938): Co. to acquire South Africa’s Grohe Dawn WaterTech
-          Mitsubishi Corp. (8058): To establish agrochemical JV with National Federation of Agricultural Cooperative Associations
-          Ohara (5218): Lifts full-year operating profit forecast 61% to 1.45b yen
-          Showa Shinku (6384): Lifts full-year operating profit forecast 57% to 1.5b yen
-          SoftBank (9984): Sprint CEO says advised by attorney to say "no comment" on M&A; ZhongAn said to set terms for $1.5b H.K. IPO
-          Sumitomo Dainippon Pharma (4506): Sunovion gets FDA approval toexpand indication for Aptiom to include treatment of partial-onset seizures
-          Tokyo Dome (9681): 1H operating profit slips 9.5% y/y to 6.1b yen; beats co.’s forecast by 8.3%
-          Toshiba (6502): Many hurdles remain over co.’s chip unit sale including competition regulation and need for more negotiations, according toJapanese Bankers Association

Australia
 
Analyst ratings:
-          MYR AU: Myer Cut to Underperform at Credit Suisse, PT A$0.67
-          MQA AU: Macquarie Telecom Group New Buy at Canaccord, PT A$18

Preview:
-          ALL AU: REVERSE FLEX: Aristocrat Adds Reprice, $425m Incrm TL Tightens
-          CSL AU: Seqirus Gets FDA Approval of Afluria Quadrivalent® (Influenza V)
-          RIO AU: Rio Tinto Stock Declines; Put Options Surge

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 In decline? The Chinese government is showing scant support for bitcoin. Photo: Shutterstock


– Edited by Adam Courtenay


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