Morning Report APAC: Asian bourses upbeat on Wall St lead

• CAD was the best performing G10 currency after the Bank of Canada rate hike
• EIA inventories took a tumble, giving a lift to crude prices
  
• Janet Yellen’s testimony was a highlight on Wednesday
  
• Yellen cooled market expectations of further rate hikes
• Corn futures for September delivery fell, and wheat is also facing  headwinds
  

By Saxo APAC Sales Trading

Speeches (Singapore Time)

•  2130 – US: Fed Chair Janet Yellen testifies again before the Senate banking panel.

Overnight News, US

• Fed Chair Janet Yellen’s testimony was interpreted as dovish by the market as she subtly shifted from transitory inflationary factors to some factors seemingly puzzling the Fed. Growth however remains robust and should continue to increase. UST yields fell in the wake of the testimony, closing at 2.32%.
• Fed’s Esther George said she would like to shrink the balance sheet sooner rather than later.
• The Bank of Canada raised rates as widely expected and followed up with a hawkish statement . The market now forecasts an additional hike in October.  CAD was the best performing G10 currency.
  

Overnight News, Europe

• European Industrial production number were very strong, continuing the trend of good European economic data. y/y expectations of 3.5% were dwarfed by 4% print.
• Euro traded to new year highs before trading lower through the day on profit taking.

• USD had a mixed session as US Treasury yields fall after Yellen's testimony.
• CAD: Was the best performing G10 currency after the Bank of Canada rate hike. CAD trades at year highs following the hawkish statement post event. The market is pricing another hike in October with risks this moves to September. CAD remains a favourite long amongst traders.
• AUD and NZD: Trade higher on USD weakness post Yellen's comments. NZD higher following previous days fall post the weak credit card spend numbers.
• Emerging Markets: Generally higher on USD weakness and lower US treasuries. ZAR rebounds strongly up over 2.3% having struggled under the weight on politic pressures and fears over the independence of the SARB. BRL rallied 1.5%, former president Rouseff was sentences to 9 years in jail.

Foreign exchange movements

• USD puts are generally bid with the market looking to hedge a less hawkish Fed.
• EUR: Some one year Vega being bought in the market, seemingly on flow.
• CAD: 3-6 month vols have remained bid in the wake of the hawkish BOC, with rate hike expectations in October.

• Janet Yellen commented that the Fed will not need to raise interest rates as high as the previous cycle on the back of the uncertain inflation outlook.
• US yields eased again following Yellen’s testimony which saw yields retreating. 2.40% for the 10 year UST may be the top for now following her comment.

Asian equities preview

Hong Kong analyst views

• China Yuhua Education (6169 HK): New Buy at DBS Vickers, PT $HK3.23
• China Life (601628 CH): A Shares Cut to Reduce at HSBC, PT 22 Yuan
• China Pacific Insurance (2601 HK): H Shares Raised to Buy at HSBC, PT $HK39
• PICC P&C (2328 HK): H Shares Cut to Hold at HSBC, PT $HK15
• Shenzhou Int’l (2313 HK): New Overweight at Morgan Stanley, PT $HK62.40
• Wisdom Education (6068 HK): New Buy at DBS Vickers, PT $HK3.17

Hong Kong stocks

• 3SBio Inc (1530 HK) to Issue Euro-Denominated Convertible Bonds.
• China Hongqiao (1378 HK) Appoints ShineWing HK as Auditor.
• Chow Tai Fook (1929 HK) 3-Month H.K., Macau Same-Store Sales Rise 5% Y/y.
• Everbright Int’l (257 HK) Expects H1 Net to Rise About 40% on Year.
• Lenovo (992 HK): Worldwide PC Shipments Fell 4.3% Y/y in Q2, Says Gartner.
• Ping An Insurance (2318 HK): H1 Life Insurance Premium Income 237.7Bbn Yuan.
• Qinhuangdao Port (3369 HK) to Issue 558mln A Shares at 2.34 Yuan Each.
• Rusal (486 HK) to Resume Taishet Smelter Construction, Sees 2020 Start Up.
• Sinopec Oilfield Service (1033 HK) Sees About 2.27bn yuan of H1 Net Loss.
• Sunac’s (1918 HK) Bond Sale Plan Rejected by Shanghai Exchange: Standard.
• Weichai Power (2338 HK) Expects H1 Net Income to Rise 125% to 150% on Year.

Japan analyst views

• Haseko (1808): Cut to outperform from buy at Daiwa.
• Bridgestone (5108): Cut to neutral from overweight at JPMorgan.
• Sumitomo Rubber (5110: Cut to underweight from neutral at JPMorgan.
• Nidec (6594): Cut to neutral from outperform at Macquarie.
• Penta-Ocean Construction (1893): Cut to neutral from outperform at Credit Suisse.
• Kyocera (6971): Cut to neutral from outperform at Macquarie.

Japan stocks

• Amaze (6076): Prelim. parent H1 operating profit ¥1.6bn vs co. forecast ¥1.1bn.
• Hogy Medical (3593): Q1 operating profit -27% to ¥1.5bn.
• Idom (7599): Q1 net income -38% to 457mln yen, operating profit little changed y/y.
• Izumi (8273): Q1 operating profit -4.1% y/y to ¥7.5bn.
• Japan Tobacco (2914): In talks to acquire assets of Philippine cigarette-maker Mighty Corp. for $890mln.
• Kintetsu Department Store (8244): Q1 operating profit +23% to ¥1.03bn; more than doubles H1 target, lifts full-year forecast 30%.
• Komeda Holdings (3543): Q1 operating profit +6.6% y/y to ¥1.8b yen.
• Konica Minolta (4902): Registers to sell as much as ¥100bn of bonds.
• Lion (4912): H1 operating profit ~¥12bn vs co. forecast ¥10.5bn, Nikkei says.
• Nippon Electric Glass (5214): Prelim. H1 operating profit ¥16b yen vs co. forecast ¥11bn.
• Ono Pharma (4528): Carfilzomib meets secondary endpoint of overall survival in multiple myeloma trial.
• OSG (6136): H1 operating profit -7.3% y/y to ¥9.1bn.
• Package delivery: Japan will allow buses and taxis to carry packages along with passengers starting in September.
• Sankyo Tateyama (5932): Forecasts operating profit -36% to ¥4.3bn for current fiscal year.
• Shinwa Co/Nagoya (7607): 9-month operating profit +32% y/y to ¥2.7bn.
• Toei Animation (4816): TV Asahi (9409) raises stake to 19.65% from 15.07%; Simplex asset cuts stake to 8.8% from 13.07%.
• Toshiba (6502): Regains access to credit line, Reuters reports.

Australia analyst views

• Commonwealth Bank of Australia (CBA): Cut to neutral at Goldman, price target $A89.37.
• Fortescue Metals Group (FMG): New hold at HSBC, PT $A5.50.
• Incitec Pivto (IPL): Raise to buy at UBS, PT $A4.
• MNF Group (MNF): New overweight at Morgan Stanley, PT $A6.15.
• Charter Hall Retail (CQR): Raises to neutral at Credit Suisse, PT $A4.13.
• Westpac (WBC): Raised to buy at Goldman, PT $A35.7.

Australia stocks

• ANZ (ANZ): Said to be near selling AMMB stake to KWAP for $900mln, Reuters reports.
• Goodman Group (GMG): To repurchase all of Goodman PLUS for $A327mln.
• QBE (QBE): May become acquisition target for AIG, Credit Suisse says.

 
– Edited by Robert Ryan

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