Article / 11 October 2016 at 1:56 GMT

Morning Report APAC: Asian markets open mixed following oil rally

APAC Sales Trading Desk / Saxo Capital Markets
Singapore

 

  • Asian shares opened mixed with Samsung Electronics in focus
  • Its price plunged after the stock reacted to Galaxy Note 7 smartphone issues
  • Vladimir Putin signalled Russia is ready to join efforts to limit supply
  • USDMXN dropped to the support of 18.75 following the Trump-Clinton debate 


 
By Saxo APAC Sales Trading


Economic data of the day (Singapore Time; GMT+8)

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Speeches

  • 1000 – USD – Federal Reserve’s Charles Evans speaks on economy and policy in Sydney
  • 1100 – NZD – RBNZ assistant governor John McDermott speaks
  • 1700 – GBP – The Bank of England's Michael Saunders speaks at a Parliamentary hearing in London
  • 2300 – USD – Fed’s Neel Kashkari speaks at town hall in Arden Hill, MN


Overnight news

Oil

  • Vladimir Putin signalled Russia is ready to join efforts to limit supply and Saudi Arabia expressed hope Opec can work out a deal. "A freeze or even a cut is probably the only proper decision to preserve stability in the global market," Putin said at the World Energy Congress in Istanbul. 
  • Saudi Arabia's Energy Minister Khalid al-Falih said: "Opec needs to make sure we don't crimp too tightly and create a shock to the market. We are going to be very responsible. Prices have dropped too low and that has impacted investment. Many companies and countries are hurting ... we don't want to give the market the wrong signal and shock the market's prices." Falih added he was optimistic that the deal could be reached next month. He said it wasn’t “unthinkable” that prices could rise almost another 20% this year to $60 a barrel. 

Foreign exchange

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  • USD was bid following the comments on oil that a deal on production could be reached in November. DXY has broken the main resistance since December 2015 at 96.65 which is significant (see graph sent yesterday).
  • USDJPY continues its bid tone with the first important resistance at 104.50.
  • The only beneficiary in the G10 space of the higher oil price was CAD which rallied 0.9%.
  • GBPUSD remains well offered with the market still trying to understand what happened last Friday and with Theresa May on a tour to meet all the European prime ministers.
  • In Emerging Markets, USDMXN dropped to the support of 18.75 following the Trump-Clinton debate and more polls giving Clinton the winner of the US elections and benefited from the rally in oil prices. USDMXN should be well supported ahead of this 100d MA and now be more in line with the USD move.


Foreign exchange volatilities

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  • There is a large strike at 104 in USDJPY tomorrow for $1bn so we are seeing some sellers of USDJPY at this level.
  • There has been some interest from funds to buy downside strikes in EURUSD.


Rates
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  • Gilts as UK curve steepened as markets pricing near-term Bank of England easing expectations, while potential inflation if sterling remained under pressure.
  • Portugal’s bonds jumped the most since June after rating company DBRS had a positive assessment of the nation’s fiscal efforts, strengthening the government’s conviction that it will keep its investment-grade rating. DBRS due to comment on rating on October 21, currently only ratings company with Portugal on investment grade, allowing QE-eligibility.
  • In a low volume session due to the US bond market being closed for the holiday, sovereign yields generally higher with curves steeper.


Commodities 

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Equities

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  • US stocks were running out of steam in the afternoon session but were rescued by the energy complex in the wake of Putin's support in production cap, and closed higher broadly. The S&P 500 climbed 9.92 points to 2,163.66, with energy (+1.5%) leading the wins.
  • Industrial-equipment maker Dover slumped 7.7% after it slashed FY earnings guidance mainly due to “a weak global economy" leading to weaker capital spending across several industrial end-markets.
  • Twitter slashed 11.5% and reached the lowest in more than two months, after Bloomberg reported that potential bidders had lost interest in making a bid for the company. The stock bounced late after Reuters reported that Salesforce.com is still considering amid resistance from its shareholders.
  • European stocks shunned away from morning losses to close higher for the first day in four on the back of rallying oil prices. The Stoxx 600 index gained 0.7% to 341.98, with the oil index jumping 1.9%. In London, the FTSE 100 climbed 53.11 0.75% to 7,097.50.
  • Deutsche Bank rallied 3.4% with markets comforted a bit by Austria's finance minister Hans Schelling, who said that he believed the bank’s problems could be resolved without any material collateral damage.
  • Royal Bank of Scotland sank 1.8% after reports of leaked documents appeared to indicate that the bank pushed small-business customers into financial difficulties in pursuit of profit.

Asia-Pacific stocks

Hong Kong

Analyst ratings

- China Postal Savings Bank (1658 HK): Rated new hold at BNP Paribas

- Citic Securities (6030 HK): Raised to add at CIMB

- Changshu Bank (601128 CH): Rated new accumulate at Huatai Securities

- Haitong Securities (6837 HK): Raised to add at CIMB

- Jiangmin Pharma (600976 CH): Raised to buy at Captial Securities

Preview

- Shenzhen exchange to conduct H.K. connect test Oct. 17-Nov.9

- Developers: Shanghai new home sales fall 34.7% on week: Uwin

- Alibaba Pictures (1060 HK): Deal with Steven Spielberg’s Amblin Partners

- Beiqi Foton (600166 CH): Signs framework agreement on smart vehicles with Baidu

- BYD (1211 HK): To build EU20mln electric bus plant in Hungary: Xinhua

- CGN Power (1816 HK): To sell 17% of Yangjiang Nuclear via public tender

- China Evergrande (3333 HK): Reports Sept. contracted property sales of 47.5bn yuan

- China Merchants Land (978 HK): Sees FY net to rise at least 200% y/y

- China Modern Dairy (117 HK): Posts three-day gain after CLSA starts coverage with buy rating

- China State Const Intl (3311 HK): Nine-month new contract value HK$63.7bn

- Geely Auto (175 HK): Sept. vehicle sales rise 82% y/y to 76,544 units

- Hanergy (566 HK): H.K. securities watchdog said to discuss trading resumption, Reuters reports

- HSBC (5 HK): Bought back 3.94mln shares at avg 622.69 pence each Oct. 10

- Kingsoft (3888 HK): Expects “significant” y/y rise in Q3 operating profit

- Merchants Shekou (001979 CH): Expects Jan.-Sept. net income 5.5b-5.7bn yuan

- PetroChina (857 HK): CNPC refinery said to face delayed start over Myanmar tax, Reuters reports

- Sanan Optoelectronics (600703 CH): Confirms talks with Osram on potential acquisition

- Sany Heavy (6031 HK): Sees turnaround in heavy machinery market: Nikkei

- SDIC Essence (600061 CH): Seeks up to 8bn yuan in private share sale

- Shanghai Tianchen (600620 CH): Says Guohua Life raises stake to 20%

- Sinopec Oilfield (1033 HK): Company expects Jan.- Sept. net loss of 8.9bn yuan


Japan

Analyst ratings

- Fujitsu (6702 JP): Cut to neutral at Macquarie

- Unicharm (8113 JP): Rated new neutral at Storm Research

Preview

- Advan (7463 JP): 1H oper. profit 2.59bn yen vs co. forecast 2.96bn yen

- Dentsu (4324 JP): Sept. parent sales +3.5% y/y

- Kohnan Shoji (7516 JP): Prelim. 1H parent 1H oper. profit 10bn yen vs co. forecast 8.8bn yen

- Nippon Yusen (9101 JP): To book impairment charges totaling 195bn yen on ships and aircraft

- Onward (8016 JP): 1H oper. profit 529m yen vs co. forecast 500mln yen; cuts full-year oper. profit target 11%; to buy back up to 3.3% of shares for 4bn yen

- Sakata Seed (1377 JP): 1Q oper. profit +24% to 4.76bn yen

- Shimachu (8184 JP): Full-year parent oper. profit 10.3bn yen vs co. forecast 11.4bn yen; targets 12b yen for current FY; to buy back up to 3.2% of shares for 4bn yen

- SoftBank (9984 JP): To retire treasury stock equal to 8.33% of shares outstanding on Oct. 31

- Takashimaya (8233 JP): 1H oper. profit 13.8bn yen vs co. forecast 13.9bn yen; lowers full-year net income target 17%

- Yoshinoya (9861 JP): 1H oper. profit 945mln yen vs co. forecast 1.3bn yen


Australia

Analyst ratings

- Mayne Pharma (MYX AU) raised to buy vs neutral at UBS

- BHP Billiton (BHP AU) raised to buy vs hold at SBG Securities

- Sealink Travel (SLK AU) raised to buy vs hold at Bell Potter

Preview

- Rio Tinto (RIO AU): IFC to quit co.’s $20bn Simandou iron ore project

- Telstra Corp Ltd (TLS AU) holds its annual general meeting in Sydney

- BHP Billiton (BHP AU) holds investor briefing on petroleum unit

- Energy Resources of Australia (ERA AU) provides Q3 update

- Cimic Group (CIM AU), UGL (UGL AU): Top UGL shareholder says Cimic offer looks ’very cheap’

- BC Iron (BCI AU) shares on halt for capital raising

- CBL Corp (CBL NZ) gets regulatory approval for French acquisition

Source: CIMB / Bloomberg

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 On fire ... oil prices soared after the Russian President said he would support 
the Opec deal. Photo: iStock
 


– Edited by Gayle Bryant


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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