Morning Report APAC: Asian markets follow Wall St in relief rally
- Tensions eased over North Korea and Hurricane Irma
- Asian markets climbed after the S&P 500 closed at an all-time high overnight
- Japan's Nikkei 225 rose 1.08% in early trade
- The US dollar held onto overnight gains against the yen
- USD had rallied overnight, as the market repriced risks from Irma and North Korea
- Overnight gold dropped 1.40%, Treasuries fell 8 bps and WTI jumped 1.24%
By Saxo APAC Sales Trading
Economic data of the day (Singapore Time)
1720 – UK – Bank of England markets director Chris Salmon speaks in Barcelona
2145 – EC – European Central Bank Vice President Vítor Constâncio speaks in Frankfurt
THE WORLD IS NICE!: Hurricane Irma, once a Category 5 hurricane, hit the coast of Florida over the weekend. Irma has gradually lost strength, however, and has been downgraded to a tropical storm as it continues to move its way across land. Storm surges were also much smaller than the National Hurricane Center expected.Tensions over North Korea cooled down. The US watered down a proposal to punish North Korea, omitting an oil embargo and a freeze of Kim Jong-un's assets, a European diplomat said. A ban on textile exports would stay. The UK and France back the plan but it's unclear whether Russia and China do. The UN Security Council votes on the draft resolution at 6 pm New York time on Monday.
USD rallied across the board with the market repricing the global risks from Hurricane Irma and North Korea. The 2 “sage heaven currencies”, JPY and CHF, depreciated the most overnight. The move overnight in FX should not last but the search for yields in emerging markets will continue. There is no particular reason to see the USD rallying.
DXY still trades below the support of 92.00, which becomes a good resistance, and there is still nothing underneath to stop it. The pain trade is still lower.
EURUSD was not able to hold above 1.2000 but we trade just on the uptrend support line which started in June. The support is at 1.1943.
GBPUSD remains very well supported and didn’t react last night on the USD buying. It’s a strong sign that the pain trade remains on top.
USDJPY is whippy, to say the least. I have talked last night to the PM of a large fund and he told me that the buyside has been selling USDJPY the past few days following frustration to keep missing the moves and, unfortunately, a lot of them got stopped out yesterday in this strong USDJPY rally. It’s hard to see any clear trade in USDJPY at this level but the trend should remain lower.
Emerging Markets: USDCNH has rebounded from the lows following the changes in regulation from PBoC but we should see some offers coming back at 6.5500. USDEM rallied slightly overnight but we should expect good foreign inflows this morning in Asia into equities and bonds to help the USD selling.
Foreign exchange movement
US stock-market indices logged their biggest one-day gains in months. The S&P 500 ended the session at an all-time high on Monday, in a broad rally led by financials and technology shares.
Global X Lithium & Battery Tech ETF jumped as much as 5.1%, to the highest in more than six years, after China said it will set a deadline for automakers to end sales of fossil-fueled vehicles. Its biggest holdings FMC Corp., Soc. Quimica & Minera de Chile SA, Samsung SDI Co. and Tesla Inc. rallied.
Tesla (up 5.9%) was also in the news as the electric carmaker announced the next generation of its Superchargers, aimed at dense cities, and sent out a free software update temporarily extending the battery life for some of its cars to help owners evacuate the looming Irma storm.
Apple Inc. jumped 1.8% as it prepared to unveil its latest iPhone on Tuesday, despite an unreleased build of iOS 11 that was leaked to the press over the weekend spilled almost all of the beans on Apple's big announcements this week.
Danish pharmaceuticals company Lundbeck tumbled 13.8% after CEO Kare Schultz resigned from his position and opted to join rival Teva Pharmaceutical Industries Ltd., which surged 19%.
Asia Pacific Stocks
- FIT Hon Teng (6088 HK): Downgraded to Hold at CICC; Price Target HK$6.02
- ASM Pacific (522 HK): ASM PACIFIC Initiated at JPMorgan with Overweight; PT HK$130
- Ningbo Huaxiang Electronic (002048 CH): Ningbo Huaxiang Electronic Initiated at SWS with Buy
- BOC Aviation (2588 HK) $500m 5Y +117.5, $500m 10Y +140
- Baoshan Steel (600019 CH): SocGen Says Warburg Pincus Bought 49% Stake in Fortune SG
- Bohai Financial (000415 CH): PRICE TALK: Avolon $5b TLB-2 L+225-250, 0.75%, Par; Due Sept. 14
- Chalco (2600 HK): Chalco Shares to Suspend Trading on Possible Asset Restructuring
- China Mer Port (144 HK): China Merchants Port Plans Acquisition of 51% of Zhongshan Port
- China National Nuclear (601985 CH): CNNP Plans to Set up Nuclear Power JV in Hebei Province
- China State Const (601668 CH): Union Properties Hires Chinese Firm to Develop Dubai MotorCity
- Country Garden (2007 HK): Country Garden Is Said in Talks w/Wadhwa on Mumbai Project:Mint
- GCL System (002506 CH): Chinese Solar-Cell Maker to Explore Future in Electric Vehicles
- Cnooc (883 HK): BP, Bridas to Combine PAE and Axion Energy in Cash-Free Deal
- Cosco Ship Port (1199 HK): Cosco Shipping Ports to Buy 76% of Port Operator in Belgium
- Dongfeng Motor (489 HK): Dongfeng Group Aug. Vehicle Sales Volume 255,344 Units
- Dongxing Securities (601198 CH): Dongxing Securities HK Markets $300m Loan to Syndication
- Geely Automobileb (175 HK): JSW Is Said in Talks With Geely on Electric Vehicles JV: Mint
- Glencore (GLEN LN): Glencore Zambian Unit Says It’s in Negotiating Period on Tariff
- Guodian Technology (1296 HK): Hong Kong’s SFC Says Guodian, Shenhua Can Skip Mandatory Offer
- HSBC (5 HK): HSBC Has Spent GBP499.4M Buying Back 67.1M Shares Since Aug. 1
- Huishan Dairy (6863 HK): Huishan Dairy Says HSBC Said Its Loans Are Immediately Due
- ICBC (601398 CH): Spain Judge Orders Proceedings Vs ICBC in Money-Laundering Case
- Jiangxi Copper (358 HK): Jiangxi Copper Names Long Ziping as Chairman, Replacing Li
- Jingrui Holdings (1862 HK)L: Jingrui Holdings Agrees to Sell 50% Stake in Hangzhou Xiaoying
- Standard Chartered (2888 HK): StanChart Is Said to Meet With U.K. FCA Over Bribe Allegations
- Sunny Optical (2382 HK): Sunny Optical Aug. Handset Lens Sets Shipments Jump 95.5% Y/y
- Wynn Macau (1128 HK): New Deal: Wynn Macau $1.35b 7NC3, 10NC5 Sr Notes
- Daido Steel (5471): Cut to sell from neutral at Haitong
- Fast Retailing (9983): Raised to buy at Deutsche Bank
- Harmonic Drive (6324): Raised to outperform from neutral at Tokai Tokyo Securities
- Haseko (1808): Rated new neutral at Nomura
- Japan Steel Works (5631): Raised to outperform from neutral at SMBC Nikko
- Makino Milling (6135): Raised to buy from neutral at Nomura
- Saizeriya (7581): Cut to neutral from buy at Mizuho
- Shoei Foods (8079): Cut to neutral from buy at Nomura
- Sony (6758): Cut to neutral at Citi
- Sumitomo Heavy (6302): Raised to outperform at Mito Securities
- Sumitomo Rubber (5110): Raised to buy from neutral at Okasan Securities
- Toyo Tire (5105): Rated new buy at Okasan Securities
- Yokohama Rubber (5101): Raised to buy from neutral at Okasan Securities
- Ci:z Holdings (4924): Full-year operating profit +4.6% to 8.6b yen; forecasts 9b yen for current FY
- Gumi (3903): 1Q operating profit -14% to 218m yen
- Japan Lifeline (7575): In pact with Endologix for development and commercialization of endovascular stent graft systems in Japan
- Japan Logistics Fund (8967): To raise as much as 9.5b yen from share sale
- Japan Post Holdings (6178): Government to sell ~1.3t yen of shares in co. as Japan takes steps to continue privatization
- Kansai Electric Power (9503): To buy Orix business that sells wholesale high-voltage electricity to apartment buildings
- Kyowa Hakko Kirin (4151): Co. and Ultragenxy report positive data from phase 2 studies of burosumab
- Machine tools: Orders rose 36.3% y/y in Aug.
- Mitsubishi Corp. (8058), Fast Retailing (9983): Mitsubishi to buy shares in Fast Retailing’s Russia unit
- Mizuho Financial Group (8411): Brokerage unit gets authorization for Seoul branch
- Okamoto Industries (5122): To buy back as much as 1.01% of shares
- Seven & i Holdings (3382): 7-Eleven Japan Aug. convenience store sales +0.2% y/y
- Shoei Foods (8079): 9-month operating profit +26% to 4.59b yen; cut to neutral from buy at Nomura
- AAD AU: Ardent Raised to Buy at Morningstar
- MQG AU: Macquarie Group Raised to Buy at UBS, PT A$91
- ALL AU: Slot-Machine Lawsuit Alleges Crown, Aristocrat Misled Players
- ARV NZ: Arvida Agrees to Buy Three Villages, Plans 1-for-5 Rights Issue
- CBA AU: Liar Loans for Housing on the Rise at Australian Banks: Chart
- NCM AU: PRECIOUS: Gold Drops as Dollar Rebounds, Irma Concerns Recede
- RMD AU: ResMed Reader Interest Rises; Options Volume High
Storm surges from Hurricane Irma were much smaller than the National Hurricane Center expected. Photo: Shutterstock
– Edited by Susan McDonald
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