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Foreign exchange markets continue to be characterised by low volatility, says Saxo Bank's John Hardy, but GBP is approaching an interesting inflection point at 0.90 versus EUR. Meanwhile, industrial metals are lower following a cautious speech by Chinese president Xi Jinping.
Article / 18 April 2017 at 1:35 GMT

Morning Report APAC: Asian markets open mixed

APAC Sales Trading Desk / Saxo Capital Markets
Singapore

 

  • Asian markets opened mixed; the Nikkei and Kospi were both higher 
  • The US Vice-President will meet Japan's Deputy Prime Minister Taro Aso
  • USTs reversed gains driven by fresh comments from Treasury Secretary Mnuchin

By Saxo APAC Sales Trading


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

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Speeches

  • 0930 – AU – Reserve Bank of Australia April rate meeting minutes
  • 2100 – US – Federal Reserve's Esther George speaks at Bard College Conference


Overnight news

North Korea

  • North Korea's UN envoy warned that the US has pushed the Korean peninsula to the "brink of war," as the Trump administration kept up its rhetoric against Kim Jong Un's regime. Russia's foreign minister urged the White House to avoid unilateral force, even as presidential aides pushed China to use its influence with Pyongyang and Vice-President Mike Pence travels to Tokyo to meet the Deputy Prime Minister. The State Department said the US isn't seeking a regime change. (Bloomberg)

France

  • Marine Le Pen and Emmanuel Macron's support for the April 23 first round of France's presidential election rose half a point to 23% and 24% respectively, according to the latest Elabe poll. Francois Fillon and Jean-Luc Melenchon each slipped half a point to 19.5% and 18%. Macron would defeat any contender in the second round with about 60% of the vote.
  • Fillon's sliding poll numbers don’t faze him. The Republican candidate said he’s "absolutely convinced" he’ll make it into the second round, AFP reported. 

Foreign exchange

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  • USD was very quiet overnight. Stocks rallied back almost 1% and the USD rallied slightly after US Treasury Secretary Steven Mnuchin said USD strength was a “good thing”.
  • USDJPY managed to close above the 200d MA, which is at 108.85.
  • GBPUSD is still trading in the tight range made by the 100d MA and 200d MA at 1.2419/1.2623.
  • Emerging markets: USDTRY rallies back hard despite a gap lower at the open to finish at the highs and way above the 100d MA. USDCNH was fairly quiet despite the strong GDP numbers.

Foreign exchange movements

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  • Cross/JPY gamma is bid going into the French elections despite the VIX drop following the rally in equities.
  • Risk reversal in EUR crosses downside is getting much less liquid ahead of the elections and still favour a strong move to the downside.


Rates
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  • USTs reversed gains while most European markets were closed, driven by fresh comments from Treasury Secretary Steven Mnuchin, who said a strong currency is good over time.
  • However, 10-year yield short-term technicals may seek support at 2.177%, the 50% retracement of the post-election day selloff.


Commodities 

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Equities

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  • The US market closed higher with all three indices up close to 0.9% but with low volumes as most European markets were still closed for the holiday.
  • Netflix reported its first-quarter result yesterday whose EPS came in at $0.40 against an estimate of $0.37, although it missed its subscribers target. Concerns of subscriber growth were dismissed as it expects international subscriber growth to continue at a much faster pace than analysts estimated. The show, House of Cards being pushed to the second quarter should see an increase in subscriber growth. Netflix closed 3% higher to finish at $147.03.
  • Finally some good news for the United Airlines as earnings beat estimates. EPS came in at 3 cents higher than the $0.38 estimates from streets. United Airlines closed 2.5% higher to $70.77.

Asia-Pacific equities

Hong Kong
 
Analyst ratings 
- China Gas (384 HK): Cut to neutral at Macquarie
- China Resources Gas (1193 HK): Cut to underperform at Macquarie
- ENN Energy (2688 HK): Cut to neutral at Macquarie
- Inzone (600858 CH) cut to neutral at Everbright Secs

Preview
- Shenzhen exchange to toughen abnormal-trading monitoring
- Banks: China’s big four banks March new yuan loans 313.8b yuan
- Air China (753 HK): Says it hasn’t cancelled North Korea routes; foreign ministry spokesman says flights cancelled for commercial reasons
- BoCom (3328 HK): CBRC official probed over alleged loan scandal link: Caixin
- BYD (1211 HK): Aims to sell up to 300 electric buses in Europe; sees up to 20 Chinese cities building its monorail in 2017; to promote dual-mode vehicles in over 200 Chinese cities
- China Southern (1055 HK): to build base at new Beijing airport
- Evergrande (3333 HK): bought back 202.9m shrs for HK$1.74b
- Geely (175 HK): To sell SUV under Lynk brand in China from 4Q
- Guosen Securities (002736 CH): FY net income 4.56b yuan
- Lenovo (992 HK): To invest $1.2b in AI over 4 years: Nikkei
- Leshi Internet (300104 CH): Le Holdings says it has never embezzled funds of Yidao
- Poly Real Estate (600048 CH): FY net 12.4b yuan vs 12.3b yuan yr ago
- Ping An (2318 HK): China Fund Management made abnormal trades
- Shenhua (1088 HK): March coal sales fell 13.8%
- Techtronic (669 HK): IRobot Says Black & Decker, Hoover Robot Vacuums are knockoffs
- Weifu (000581 CH): FY net 1.67b yuan vs 1.52b yuan
- Yingde Gases (2168 HK): Reports loss, to resume trading Tuesday; in talks with lenders on breach of loan covenant
- ZTE (763 HK): 1Q Net Income 1.21b Yuan

Japan
 
Analyst ratings 
- Aeon Financial (8570): Cut to underperform at Credit Suisse
- Asahi Group (2502): Cut to equalweight at Morgan Stanley
- Gree (3632): Raised to outperform at Daiwa
- Gunosy (6047): Rated new outperform at Iwai Cosmo
- Lawson (2651): Raised to neutral at Okasan
- Mitsui & Co (8031): Outlook raised to stable at R&I
- Yakult (2267): Cut to underweight at Morgan Stanley

Preview
- Daihatsu Diesel Manufacturing (6023): Preliminary full-year net income -36% y/y 2.3b yen, beats forecast for 1.9b yen
- Densan (3640): Preliminary full-year net income -57% y/y at 415m yen, but beats forecast for 266m yen
- GungHo Online Entertainment (3765): Founder Taizo Son says he has moved to Singapore from Japan
- Horiifoodservice (3077): TBI Holdings to launch tender offer for co. shares for 430 yen each
- H2O Retailing (8242): March Hankyu Hanshin store sales rise +1.1% y/y
- Marusan Securities (8613): Preliminary full-year net income -71% y/y at 797m yen
- Shikoku Chemicals (4099): Preliminary full-year net income +20% y/y at 5.8b yen and beats forecast for 4.5b yen
- Showa Denko (4004): Will be able to meet May 1 earnings deadline

Australia
 
Analyst ratings
- Amaysim (AYS): Cut to sell at Shaw and Partners, PT A$2.11
- Telstra (TLS): Cut to sell from hold at Shaw & Partners
- Vocus (VOC): Cut to sell from hold at Shaw & Partners
- Whitehaven Coal (WHC): Cut to underperform at Macquarie, PT A$2.70; Benchmark spot coking coal price rises to record

Preview
- AGL Energy (AGL): How not to transform a power grid: Lessons from Australia: BNA
- Alumina (AWC): Elliott Management says Kleinfeld exit at Arconic ‘long overdue’
- Aurizon (AZJ): Goonyella coal rail line still closed as others reopen
- BHP Billiton (BHP): Iron ore seen wiping out gains as China turns to home grades
- Fletcher Building (FBU): Investment banks pitching potential sale of building co.: AFR
- Fortescue (FMG): Bullish on China demand outlook even as iron ore tanks
- Investa Office Fund (IOF): FY17 FFO view raised to A29.5c/unit from A29c
- Newcrest Mining (NCM): To assess Cadia operations after seismic event
- Northern Star (NST), Evolution (EVN), Saracen (SAR), Regis Resources (RRL), Resolute Mining (RSG), OZ Minerals (OZL): Gold advances to five-month high as USD drops; Platinum rises
- Origin Energy (ORG): China-owned businesses, Macquarie Infrastructure among bidders for Stockyard Hill wind farm: Australian
- Sydney Airport (SYD): Australia lines up funding for second Sydney Airport: Australian
- Woodside (WPL), WorleyParsons (WOR), Oil Search (OSH), Beach Energy (BPT), Karoon (KAR), Origin Energy (ORG), Santos (STO): Crude falls as rising rig count seen boosting U.S. production
- Yancoal (YAL): Parent Yanzhou Coal’s outlook changed to stable from negative at Moody’s


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US Vice-President Mike Pence will meet with Japan's Deputy PM Taro Aso. Photo: Shutterstock. 


– Edited by Gayle Bryant


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