Morning Report APAC: Asian markets mixed following G20 meeting
- Asian markets opened mixed following the weekend's G20 finance ministers meeting
- Leaders are in Beijing for the 18th session of the China Development Forum
- The USD continued to sell off slightly following the FOMC's dovish hike
- US yields were also lower on the rate rise
By Saxo APAC Sales Trading
- 0940 – AU – Reserve Bank of Australia's Luci Ellis speech in Camberra
- 0045 – EC – Bundesbank President Jens Weidmann speaks in Loerrach, Germany
- 0220 – UK – Bank of England chief economist Andy Haldane speaks in London
- Finance Ministers failed to get the US to renew an anti-protectionist pledge and a vow to fight climate change, in the face of US President Donald Trump’s “America First” push. The group dropped a pledge to avoid "all forms of protectionism" in its joint statement, after Treasury Secretary Steven Mnuchin declared the current rules are unfair to the US.
- Chinese Finance Minister Xiao Jie said the organisation should be "adamantly against" protectionism, while Germany, Russia and France expressed unhappiness with the fudged compromise. An entire section on action against climate change was dropped from the final document.
- Donald Trump says Germany owes "vast sums of money" to NATO and that the United States "must be paid more" for providing defence. German defence spending is set to rise by 1.4 billion euros to 38.5 billion euros in 2018 – a figure that is projected to represent 1.26% of economic output, Finance Minister Wolfgang Schaeuble has said.
- US Secretary of State Rex Tillerson said on Saturday that the US and China will work together to get nuclear-armed North Korea take “a different course”. Chinese Foreign Minister Wang Yi described the talks with Tillerson as “candid, pragmatic and productive”. The two sides appeared to have made some progress or put aside differences on difficult issues, at least in advance of a planned summit between Chinese President Xi Jinping and US President Donald Trump.
- On Friday, Tillerson left open the possibility of a pre-emptive military strike against North Korea, saying Friday that all options are being considered to contain the rogue state: “All options are on the table. North Korea must understand that the only path to a secure, economically prosperous future is to abandon its development of nuclear weapons, ballistic missiles, and other weapons of mass destruction.”
- USD: USD continued to sell off slightly after the big drop seen following the dovish hike from the Federal Open Market Committee. DXY broke the 100d MA and is not trading at the strong support level of 100.
- EURUSD confirmed the break of the 100d MA and we are now targeting the next resistance at 1.0800.
- USDJPY found very good resistance at 115 ahead of the FOMC meeting and dropped like a rock following the meeting. We broke the Ichimoku cloud and the first resistance is at 113.74. The next support to break is the 100d MA at 113.38.
- Emerging markets: The USD dropped significantly against all EM currencies with USDBRL down almost 1%. USDMXN had a strong break lower last week, breaking the 200d MA at 19.6091. USDZAR dropped to the lowest level since August 2015.
Foreign exchange volatilities
- We had seen a big selloff in Vega across the board in the past two weeks but NY funds started to buy volatilities on Friday, mainly USD puts
- The most interesting is EURUSD has been paid up for upside and the risk reversal is favouring the topside now for the front-end. The two week 25d RR was paid at 0.3 for the calls.
- US yields continued to head lower after Federal Reserve’s dovish interest-rate forecast on Wednesday and the decline extended on the report on the drop in US consumer inflation expectations. Consolidation is expected to continue into the Asia hours.
- German yields retreated with EURUSD, reversed the initial reaction to the European Central Bank's Walter Nowotny’s discussing raising deposit rates.
- US stocks weakened at the close, but managed to hold weekly gains. The Dow rose marginally, while the S&P 500 climbed 0.2% and the Nasdaq notched a weekly gain of 0.7%.
- Adobe Systems jumped 3.8%, after the software company late Thursday reported better-than-expected quarterly results as adjusted earnings came in at 94 cents/share. vs estimates of of 87 cents/share.
- Tiffany & Co gained 2.7% after it reported better-than-expected earnings and gave an upbeat outlook.
- European stocks closed higher Friday, hanging on to their highest in more than a year, with all except the financial sector ended higher, noting that Stoxx Europe 600 rose 1.4% for the week, a second weekly rise in three weeks.
- Airbus Group slipped 0.5% after France’s financial-crimes investigator started a preliminary investigation into alleged wrongdoing at the European plane maker over potential corruption.
Asia Pacific equities
- 3SBio (1530 HK): Raised to buy at Goldman
- CCB (939 HK): Raised to outperform at Daiwa Securities
- China Unicom (762 HK): Cut to reduce at GuoTai JunAn
- Jiangnan Group (1366 HK): Raised to buy at Everbright Securities
- ZTE (763 HK): Raised to buy at SWS Research
- Banks: China to ease restrictions on foreign banks: Sec. News
- Developers: China home-price rises regain speed; H.K. existing home prices rise 0.48% on week to new record; NDRC head says excessive credit in the property market to be prevented: radio; Beijing to increase housing land supply, tighten mortgage rules; Changsha, Guangzhou tighten home purchase rules
- Gas: CNPC aims to raise 2017 natural gas output to 100 Bcm
- Oil: Saudi Arabia aims to increase oil supplies to China: Xinhua
- BEA (23 HK): Buys 21% of Cambodia’s Prasac
- Bank of Jiangsu (600919 CH): FY net 10.6b yuan vs 9.5b yuan year ago
- Beijing Gas Blue Sky (6828 HK): Issues positive profit alert
- Belle Int’l (1880 HK): Prelim FY net down 15%-25%
- Billion Industrial (2299 HK): FY profit 315m yuan, up 56.2% year ago
- Binhai Investment (2886 HK): FY net HK$172m
- Cathay Pacific (293 HK): EU fines $61.3m for antitrust violations
- CEFC Anhui (002018 CH): FY net 368m yuan vs 158m yuan year ago
- China National Nuclear Power (601985 CH), Sufa Tech (0000777 CH): Parent CNNC plans reorganization
- Cnooc (883 HK): Group co. exercises rights to acquire Uganda blocks
- China Overseas Property (2669 HK): FY profit HK$226m vs HK$117m year ago
- China Resources Pharma (3320 HK): FY profit HK$2.82b vs HK$2.85b year ago
- China Shenhua (601088 CH): Profit rises 1st time in 4 years on coal price surge
- China Vanke (2202 HK): Invests 5.1b yuan in two commercial property funds
- Launch Tech (2488 HK): FY net 21.52m yuan vs loss 93.2m yuan
- Minmetals (230 HK): FY net HK$512.1m vs HK$278.2m year ago
- NWDS China (825 HK): Appoints new CEO, managing director resigns
- PICC (1339 HK): To step up internationalization this year
- Roadshow (888 HK): FY revenue HK$407.5m vs HK$411.9m year ago
- Rusal (486 HK): 2017 output at previous year’s level: IFX
- Shanghai Airport (600009 CH): FY net 2.81b yuan vs 2.53b yuan year ago
- Southwest Securities (600369 CH): Notified of probe by regulator
- Shanghai Electric (601727 CH): FY profit 2.02b yuan
- Titan Petrochem (1129 HK): Expects FY profit vs loss year ago
- TVB (511 HK): Extends deadline to dispatch share buyback doc. to April 10
- Xiamen Unigroup (000526 CH): Shares halt trading, plans major matter
- Xtep International (1368 HK): FY gross profit margin 43.2%
- Zhaojin Mining (1818 HK): FY Gross Profit Reaches 2.73B Yuan
- Zhe Jiang Kangsheng (002418 CH): Plans to buy new energy assets
- Sandfire Resources (SFR): Cut to sell at Morningstar
- Trade Me (TME): Raised to hold at Morningstar
- Trading ex-dividend: Amaysim, Auckland Airport, Chorus, Costa Group, Link Admin, Spotless Group
- BHP Billiton (BHP) Considers Kelly, Hewson for role of Chairman: Sunday Times; BHP sweetens offer before meeting with striking Chile miners
- Fletcher Building (FBU): Sees FY17 Ebit NZ$610m-NZ$650m vs prev. target NZ$720m-NZ$760m; NOTE: FY17 Ebit est. NZ$739.7m (11 analysts, range NZ$722m-NZ$758m): Bloomberg data
- Qantas (QAN): CEO Joyce, supporter of gay marriage, faulted by Aussie lawmaker
- Rio Tinto (RIO): CEO says key iron ore uncertainty is Chinese capacity: CNBC
- Slater & Gordon (SGH): Lenders sell ~$400m of Slater & Gordon debt in auctions
- Sydney Airport (SYD): Scheduled to release February traffic results
- Teranga Gold (TGZ): Reports fatality at Sabodala gold mine
This report was compiled by the Saxo APAC Sales trading team in Singapore – the home of social trading. Follow the team on @SaxoStrats or post your comment below to engage with Saxo Bank's social trading platform.
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