Article / 12 December 2017 at 2:03 GMT

Morning Report APAC: Asian equities mixed, Brent crude surges

APAC Sales Trading Desk / Saxo Capital Markets
Singapore

 

  • US tax cuts could flout international agreements and undermine trade
  • GBP fell after investors realised that phase II of the Brexit talks poses challenges
  • Bitcoin futures surged on day one of trading, but there were few transactions
  • Precious metals are under pressure, but base metals have gained ground
  • Brent crude surged on the news of the closure of a North Sea pipeline
By Saxo APAC Sales Trading


Economic data of the day (Singapore Time)

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Speeches (Singapore Time)

  • 0615 – Australia: RBA governor Philip Lowe gives a speech in Sydney
  • 0800 – Australia: RBA assistant governor (financial markets) Christopher Kent gives a speech in Sydney


Overnight news

  • The Financial Times wrote that  finance ministers from Europe’s five largest economies have warned the Trump administration that the Republican tax cut plans would flout international agreements and undermine trade. They have raised the possibility of retaliating. “We have strong concerns if [US action to protect its tax base] is done via measures that are not targeted on abusive arrangements as this would impact on genuine business activities”
  • A pipe bomb was set off in New York's Times Square subway station, injuring the bomber and three others. The 27-year-old suspect, Akayed Ullah, suffered serious burns and was take into custody. The Bangladeshi immigrant told police he's an ISIS follower, but investigators believe he acted alone, an official said.
Overnight new, Bitcoin
  • On the first day of trading on the CBOE, Futures surged as much as 26%, but action was limited, with about 2,494 trades between 1800 on Sunday to 0930 in New York, with an overall value of $50.2 million. The CBOE contract is about 7% pricier than Bitcoin itself.

 

Foreign exchange

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  • The US dollar dropped slightly ahead of a slate of central bank decisions; the most important ones will be tonight’s Fed announcement and tomorrow’s ECB announcement.
  • The NZ dollar was the biggest winner among G10, after hawkish-leaning former deputy governor Adrian Orr was appointed to be the new governor.
  • GBP dropped against USD, as investors realised that plenty of challenges lie ahead in the second phase of Brexit negotiations.
  • Emerging markets: overall markets was muted amid little move with USD. BRL pared earlier gains following house speaker pessimism on passing a pension bill next week. ZAR weakened on threats of spit while new leader is being chosen.


Foreign exchange movements

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  • Overall markets have been quite muted as the end of 2017 approaches.
  • USDJPY seen bid in vols ahead of several central bank decisions this week.
  • A short squeeze in NZD gama was seen after a hawkish new governor being appointed, vols were up.

Rates

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  • The US curve flattened, with ‘risk on’ sentiment driving stocks to record highs, and expectations of an imminent Fed rake hike annoucement.
  • UK gilts yield fell back to a three-month low as investors realized that uncertainties still lie ahead in the second phase of Brexit negotiations.
 Commodities

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US equities

  • Overstock soared 22% as it was reported that the investment arm of Morgan Stanley owns 11.4% stake of it. Overstock, an e-commerce site now turned proxy play for Bitcoin has been accepting and embracing Bitcoin many years ago and one of its subsidiary was about to launch an ICO. Overstock closed at $55, up almost $10 in yesterday’s session.
  • Bluebird Bio jumped 18% on its result of its clinical trial of its multiple myeloma candidate. Bluebird Bio was also upgraded by a slew of analysts with Jeffries and Goldman boosting its target price to $211 and $309 respectively.
  • Centurylink soared 8.2% after signing a 5 year contract with the state Pennsylvania to provide data networking services to its employees. In addition, according to SEC filings dates Friday, there were some directors who bought the shares with the CEO buying $700,000 and COO buying about $1 million worth.

European equities

  • In the European market, HSBC traded 2.5% higher on news that the U.S department of Justice would seek dismissal of charges that it brought in 2012 as it recognised HSBC's progress in its anti-money laundering compliance and capabilities in the past five years.

Hong Kong equities

  • In Hong Kong, Nissin Food traded 4.8% lower on its debut, down 17 cents against the IPO price of $3.54. Overall, Hong Kong market soared 1.14% as it approached the 29,000 level.

 

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The Brent crude price surged sharply higher on the news of the closure of a leaking North Sea pipeline. Photo: Shutterstock

 
– Edited by Robert Ryan


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