Morning Report APAC: Asian markets soar on Wall St rally
- Gold rebounded on US dollar weakness after its worst loss in two months
- Copper hit a two-week high amid strikes in Peru, disruption in Indonesia
- AUDUSD rebounded off a five-month low on comments from the RBA governor
- MXN hit a one month high after some progress in NAFTA talks
By Saxo APAC Sales Trading
Economic data of the day (Singapore Time)
- 0300 – US: November FOMC meeting minutes
Overnight news, US
- US stocks setting a new high, with IT and healthcare sectors leading gains.
- Yield curve continue to flatten, with short maturities being sold ahead of FOMC minutes and Dec rate hike, while long ends being bought over US tax overhaul.
- The Chicago National Activity Index surged to 0.65 from 0.36, which was upward revised from 0.17. This is the highest level in six years.
Overnight news, Australia
- RBA governor Philip Lowe gave a speech after meeting minutes were published. He maintained his optimistic tone on the Australian economy, noted that the tighter labour market will in the end push up wages and inflation, which he acknowledged as weak.
- He cited the reason for inflation picking up slower than expected was partially due to retail competition, which is a hot topic with Amazon opening in Australia soon. The RBA forecasted that the inflation will reach 2% by end 2019.
- US dollar: USD declined against all other G10 currencies, amid global treasury buying and US curve flattened.
- CAD: USDCAD paired most losses in early session after NAFTA negotiations. US Treasury yield declined and oil prices gain are also supporting the move.
- AUD: AUDUSD rebounded off a five-month low, in reaction to RBA governor noted that the next rate move will be hiking than easing, though mare patience is needed.
- Emerging market currencies: Emerging market currencies mostly gained over USD, led by MXN, which hit a one month high after some progress in NAFTA negotiations. TRY slumped to all-time low and government bonds tumble, prompting the government to lift bank-funding cost. ZAR edged higher as investors waiting for credit rating on Friday, level 14 is to be watched.
Foreign exchange movements
- G10 1-week vols are all sold off ahead of Thanksgiving day tomorrow, when markets are expected to be quiet.
- USDTRY 1-month spiked a lot and the pair is now at all time high and concerns on Turkey’s market rout remains.
- ZAR vols remain high as investors are concerned on rating downgrade risks at the end of the week
- US treasury yields were lower as pension funds are suspected to be buying longer-dated bonds to get ahead of the potential US tax haul.
- Core European yields were lower amid quiet trading, taking the hint from US. Peripherals outperformed with front-end Italy spiked following Treasury announces a buyback auction.
- U.S. stock indexes ended at records and near session highs on Tuesday, boosted by another round of strong earnings, technology shares leading the way, with Technology Select Sector SPDR ETF rose 1.1%.
- Medtronic rallied 4.8% as adjusted earnings came in $1.07/share for its latest quarter, 9cps above estimates. Revenue came in above forecasts, as well, despite declines related to the sale of a unit to Cardinal Health, the quarter's hurricanes, and the Californian wildfires.
- Packaged-foods heavyweight Hormel Foods Corp. jumped 3.35% as beat estimates by 1cps, with quarterly profit of 42c per share and announced it would merge its grocery and specialty foods businesses.
- EasyJet, was biggest gainer on FTSE100, as the low-cost airline bounced 5.1% after it said passenger traffic rose 10% in fiscal 2017, but that net profit fell 24%.
Hong Kong equities
- Hong Kong's largest luxury jeweller Chow Tai Fook Jewellery Group Ltd. (01929.xhkg) reported a 46% rise in net profit for the first half ended September after markets closed Tuesday, with its first-half net profit rose to $HK1.78 billion. The results were largely in line with the $HK1.73 bn net profit forecast in a poll of analysts by S&P Global Market Intelligence.
– Edited by Robert Ryan
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. Follow us on @SaxoStrats on Twitter
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