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James Kim@Saxo
James Kim, sales trader at Saxo Capital Markets, Australia, examines trading strategies during week 19 in a technical analysis of charts for forex and indices. Kim looks at trends in the US dollar index and at pairs including EURUSD and AUDUSD. He also examines eMini futures and gold.
Article / 16 May 2017 at 1:27 GMT

Morning Report APAC: Asian markets higher on oil bounce

APAC Sales Trading Desk / Saxo Capital Markets
Singapore

 

  • Asian markets opened higher on the 2% rise in oil prices
  • Oil rose after Russia and Saudi Arabia announced output cuts should be extended
  • US stocks closed at record highs buoyed by positive sentiment
  • US yields edged up as treasuries sold off on the rally in oil and stocks


By Saxo APAC Sales Trading

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Speeches

  • 0930 – AU – Reserve Bank of Australia May rate meeting minutes
  • 1255 – JN – Bank of Japan Haruhiko Kuroda speak at WSJ’s meeting
  • 2330 – EC – European Central Bank's Ewald Nowotny speaks at event
  • 0100 – EC – ECB’s executive board member Benoit Coeure speaks in Frankfurt


Overnight news

United States

  • US Empire Manufacturing data came in much weaker than expected contracting -1 vs a +7.5 expectation.
  • Stocks closed at record highs buoyed by positive sentiment as oil prices bounced strongly.
  • Oil rallied aggressively as Saudi and Russia said they were in support of extending existing cuts further into Q1 2018. Oil was up over $2/barrel.
 
Europe
  • The fallout from the large-scale hacks continued as many workers returned to their offices on Monday morning.
  • Italian CPI was the only data point from Europe yesterday coming in line with expectations at 2.0%.
 


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  • USD sold off from the risk-on mode helped by the rally in oil and equities pushing the S&P 500 to a fresh record. DXY confirmed the break lower of the 200d MA. The next target is 98.00.
  • USDJPY was the only one holding and is still well supported above the 100d MA at 112.95.The flows came mainly from EURJPY interest from hedge fund managers. EURJPY rallied 1.1% overnight to reach a new year high close to 125.
  • EUR rallied on the back of EURJPY interest and is close to the year highs.
  • Emerging markets: USDEM traded lower overnight following the global USD selloff with commodities and equities higher. Equity and bond inflows should resume today in Asia and continue to push USD lower.


Foreign exchange volatilities

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  • The market doesn’t seem concerned anymore on the UK elections pricing only a 0.5% for GBPUSD.
  • Funds are buying calendar spreads in USDJPY (Buying the long end and selling the short end.

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  • US yields edged up as treasuries sold off on rallying oil and stocks, and partially being supported by better-than-expected confidence in housing
  • European treasuries eased lower on the back of commodities rebound. A slate of IG corporate insurance and Merkel’s election victory is North Rhine-Westphalia are expected to add on the pressures for treasuries. 

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  • US stocks are broadly higher with both S&P500 and the Nasdaq being pushed to record highs, on the back of a more than 2% rally in oil, and partially supported by better-than-expected confidence in housing markets.
  • Sears Holdings slumped by 12.4% after its CEO publicly confronted the embattled department store chain’s vendors saying they took advantage on rumour and they will do what's right to protect the interests of the company and the millions of stakeholders.
  • PureFunds ISE Cyber Security ETF leapt 3.2% following the ransomware virus WannaCry on Friday
  • European stocks inched higher on the back of pledge on a mega cross-border infrastructure deal and rising commodity prices led by oil. The Oil & Gas Index climbed 0.9%.
  • The mining sector was boosted by Chinese President Xi Jinping saying that there will be more than $100bn in fresh financing to support its “One Belt, One Road” infrastructure program. Rio Tinto rallied 1.7%, BHP Billiton 2.3%, South32 2.6%, Anglo American 3.2% and Glencore 3.2%.


Asian equities

Hong Kong 

Analyst ratings

- Angang Steel (000898 CH): Raised to outperform at Credit Suisse

- BBMG (601992 CH): Cut to underperform at Credit Suisse, PT 5.80 Yuan

- China Resources Gas (1193 HK): Cut to hold at Daiwa, PT HK$23.20

- China Resources Power (836 HK): Raised to neutral at Credit Suisse, PT HK$15

- China Shenhua (1088 HK): Raised to neutral at Credit Suisse

- Citic Bank (998 HK): Cut to underweight at JPMorgan, PT HK$4.60

- CNBM (3323 HK): Cut to underweight at JPMorgan

- Datang Power (991 HK): Raised to Outperform at Credit Suisse

- HKEx (338 HK): Rated new buy at China Galaxy, PT HK$232.50

- Geely Auto (175 HK): Raised to buy at Haitong Intl, PT HK$13

- Huadian Power (600027 CH): Raised to outperform at Credit Suisse

- Maanshan Steel (600808 CH): Raised to neutral at Credit Suisse

- Minth Group (425 HK): Cut to neutral at Haitong Intl, PT HK$33.80

- Pou Sheng (3813 HK): Cut to hold at BOC Intl, PT HK$1.55

- Shanghai Fosun Pharma (2196 HK): Cut to neutral at UBS

- Sinopec (386 HK): Cut to hold at Jefferies, PT HK$6.50

- StanChart (2888 HK): Raised to buy at Shore Capital

- TCC Intl (1136 HK): Cut to neutral at Credit Suisse

- Zhaojin Mining (1818 HK): Raised to neutral at Credit Suisse

- Zijin Mining (601899 CH): Raised to neutral at Credit Suisse

Preview

- Banks: China big-four banks April new yuan loans 306.1 yuan

- Software: Chinese network blames some IT companies for cyberattack exaggeration

- Bank of Beijing (493 HK): Signs deal with Gome’s financial arm

- Belle (1880 HK): FY net income misses estimate

- Cathay Pacific (293 HK): To be deleted from MSCI Hong Kong index

- China Gas (384 HK): Sees connection fees not included in 6% cap on return

- China Southern Airlines (1055 HK): April passengers up 7.1% y/y to 10.1m|

- Cosco Shipping (1919 HK): Unit to buy 24.5% Kazakhstan dry port stake

- China United Network (600050 CH): Shares to be halted another 2 months

- Gome (493 HK): Financial arm signs pact with Bank of Beijing

- Guangzhou Auto (2238 HK): Added to MSCI China A index

- Meitu (1357 HK): Added to MSCI China index

- Melco Int’l (200 HK): Bought back 10.1m shares for HK$175.9m May 15

- Rongsheng (2493 CH): To buy 51% of Zhejiang Petrochemical for 2.59b yuan

- Shandong Molong (568 HK): Shareholders face insider trading penalties

- Shenzhen Century Plaza (000033 CH): Under CSRC probe

- Sihuan Pharma (460 HK): Added to MSCI China index

- Techtronic Industries (669 HK): Sears to take legal action to ensure One World honors contract

- Wanda Cinema Line (2739 CH): To invest 300m yuan in Bona Film

- China Vanke (2202 HK): Plans to join in 5.39b yuan fund for property investment


Japan

Analyst ratings

- Aeon Financial Service (8570): Raised to neutral at Macquarie

- Astellas Pharma (4503): Cut to neutral at Mizuho

- Azbil (6845): Cut to neutral at Macquarie

- Hitachi Zosen (7004 JP): Cut to neutral at Ichiyoshi Research

- JR Central (9022): Cut to neutral at Okasan

- Mazda Motor (7261 JP): Cut to neutral at Mizuho, PT 1,700 yen

- Sundrug (9989): Cut to neutral at Ichiyoshi Research

- TDK (6762): Raised to outperform at ACE Research

- Toshiba (6502): Cut to neutral at Macquarie

- Yakult Honsha (2267 JP): Raised to outperform at Macquarie, PT 7,900 yen

Preview

- MSCI: Disco, Tosoh, Kyushu Railway added, while Hokuriku Electric Power, Mitsubishi Logistics cut

- ANA Holdings (9202): Hires banks for 10b yen, 20-year bond sale

- Aozora Bank (8304): Full-year net income at 43.8b yen, exceeds company forecast of 43b yen

- Asahi Group (2502): Q1 net income rises 30% y/y; registers to sell as much as 450b yen of bonds

- Askul (2678): To book 2.8b yen gain in fire-related insurance money

- Dai-Ichi Life (8750): Net income outlook trails estimates, plans buyback

- Dentsu (4324): 1Q operating profit 32.1b yen vs. analyst estimate of 29.8b yen

- Idemitsu Kosan (5019): Targets 89b yen net income for current fiscal year vs. 79.4b yen analyst estimate; expects Nghi Son refinery in Vietnam to start commercial operations by end of this FY

- Japan Post Holdings (6178): Swing to full-year net loss of 29.0b yen from 426.0b yen profit a year ago; company expected 40.0b yen loss

- Japan Radio (6751): Nisshinbo (3105 JP) to take Japan Radio private in stock transaction

- Kao (4452): Registers to sell as much as 100b yen of bonds

- Mitsubishi Financial (8306): Sees profit rising 2.5% in FY17; to buy back shares

- NTT (9432): Forecasts 1.59t yen in operating profit this FY vs. analyst estimate for 1.62t yen

- Orix (8591): Full-year net income +5% y/y to 273.2b yen; expects 9.8% y/y growth this FY to 300b yen

- Takada (1966): Full-year net income -17% y/y to 698m yen; beats company forecast by 16%

- Toridoll HD (3397 JP): Toridoll to acquire Tam’s Yunnan Rice Noodles; no terms given

- T&D (8795): Full-year net income +3.6% y/y to 75.2b yen vs. company forecast for 75b yen; expects 1.6% drop this FY to 74b yen


Australia

Analyst ratings

 - BHP Billiton (BHP): Raised to buy at SBG Securities, PT GBP13.80

- CYBG (CYB): Raised to hold at Morgans Financial, PT A$4.83

- Independence Group (IGO): Cut to neutral at Macquarie, PT A$3.30

- Newcrest Mining Ltd. (NCM): Raised to buy at Shaw and Partners, PT A$22

- Western Areas (WSA): Cut to underperform at Macquarie, PT A$2

- Rio Tinto (RIO): Cut to sell at SBG Securities, PT GBP29.50

Preview

- ANZ Bank (ANZ): Prices $2bn debt in four parts

- Asaleo Care (AHY): Paul Townsend to resign as CFO in August; Cut to neutral at Macquarie, PT A$1.65

- Ausnet (AST): FY results expected; NOTE: Adj. net income est. A$278.2mln (12 analysts)

- Bluescope Steel (BSL): To be added to MSCI Australia index from May 31 close

- CC-Amatil (CCL): Annual meeting scheduled; Co. in April forecast FY17 adj. profit broadly in line with FY16

- Fairfax Media (FXJ): Fairfax’s second-largest holder urges board to reject TPG-led offer: AFR

- Macquarie Group (MQG): Trades ex-div.

- National Australia Bank (NAB): Trades ex-div.

- Oil Search (OSH), Santos (STO): ExxonMobil reports positive results on Muruk-1 sidetrack well

- Orica (ORI): 1H results expected; NOTE: Rev. est. A$2.67b (3 analysts)

- Sims Metal (SGM): Mitsui may be considering selling its stake in the scrap metal recycler; NOTE: holders

- Transurban (TCL): Looks to court new lenders as infrastructure beckons

- Viva Energy REIT (VVR): Annual meeting scheduled

- Vocus (VOC): To be removed from MSCI Australia index from May 31 close

- Woodside Petroleum (WPL): Expects first Wheatstone LNG in August: CEO Coleman; Gas export curbs apply to all Australian LNG projects: Woodside

- WorleyParsons (WOR), Beach Energy (BPT), Karoon (KAR), Origin Energy (ORG): Oil jumps as Saudis, Russia favor extending output deal to 2018


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 A 2% bounce in oil prices helped lift Asian markets in early trade. Photo: Shutterstock

 
– Edited by Gayle Bryant


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