Morning Report APAC: Asian markets up as USD firms
- Most Asian markets were higher at the start of trading
- Saudi Arabia said it would cut production and limit August exports to 6.6mln b/d
- Gold snapped its six-day rally and reserved slightly from its five-week high
By Saxo APAC Sales Trading
Speeches
- 0750 – Bank of Japan – BoJ Minutes of June 15-16 meeting
- 1200 – Euro – European Central Bank's Yves Mersch speaks in Singapore
Overnight news
United States
- The US released its flash PMI data yesterday with a beat in the manufacturing PMI that came in at 53.2 vs consensus at 52.3.
- However, the US home resales that were released shortly fell more than expected in June as a dearth of properties amid strong demand pushed prices to a record high, keeping first-time buyers on the peripheral.
- Despite last month's decline, June's sales pace is 0.7% above a year ago which could indicate home ownership growth in an improving economic environment but data in June is the second lowest in 2017.
Euro
- Euro data was disappointing with the release of France and German flash PMIs.
- Germany failed to beat consensus on the release of both Manufacturing and Services PMI. Manufacturing PMI came in at 58.3 vs 59.1 while Services PMI also disappoint as it came in at 53.5 vs 54.4.
- The combined manufacturing data failed to beat consensus, which was the first time since August readings last year.
Opec
- Crude gains as Saudi Arabia, the world top oil exporter announced it would go further than cutting its production and would also limit exports at 6.6 million barrels/day in August which is 600,000 barrels less than it is currently exporting.
- Saudi also cited some non-compliance from countries that were exporting huge amount of oil even though some countries are exporting huge amount despite claims that they are cutting output.
- Nigeria and Libya, which were exempted from last year deal have been included in efforts to reduce global oversupply but the production limit imposed are currently higher than the production per day.
- Ironically, both African nations saying they’ll need to keep pumping at a higher level before they can join a global effort to stem a supply glut and their wishes were granted with the production limit of Nigeria raised to 1.8mln b/d vs current output of 1.6mln b/d in June while Libya also saw production limit raised to 1.25mln b/d vs 820,000 b/d output in June.
- The USD index traded firm on possible profit taking from the shorts on mixed economic data. Market await the Federal Reserve guidance on balance sheet reduction on Thursday and Friday’s GDP data.
- AUDNZD fell after hitting the 1.07 resistance key resistance level but the 100-day moving average should offer some support at 1.0615.
Foreign exchange volatilities
- EUR: Market still buying topside strikes above 1.17 for EURUSD
- JPY: Market is short gamma on and is buying downside strikes for protection
- EGBs drifted higher on soft flash PMI prints and easing price pressures, while Peripheral bonds edged tighter, with the exception of Spain, which widened across the curve, despite having the ratings outlook raised to positive by Fitch on Friday.
- UST were under pressure, with yields climbing 1.5bp-2.5bp across the curve. Three-month T-bill auction saw the lowest demand in eight years, reflecting growing concerns on potential debt ceiling impasse.
- Nasdaq once again shines as it hit a record high on Monday but Johnson & Johnson earnings weighed down on both S&P and the Dow Jones. Johnson & Johnson slipped 1.7% as it faces discounted competition from South Korea's Samsung Bioepis on its big-selling rheumatoid arthritis drug.
- Alphabet slipped 3% in after-market hours after it reported a lower profit hurt by a big anti-trust fine in Europe that cost $2.74 billion. While both revenue and EPS met expectations, the fine coupled with a 23% drop in cost per click were much higher than anticipated at 15%. The cost per click is also a measurement of how much advertisers are willing to pay each time a user click for an ad served by google.
- Blue Apron surged 13% after Goldman initiated coverage of the meal-delivery kit company’s stock with a buy rating and a price target of $11. Despite relatively new to the secondary public, the timing of the IPO couldn’t get worse as Amazon’s attempt to acquire Whole Foods Market will mean that it may be a direct competitor to Blue Apron (if regulatory approve) and saw the share price collapse from its IPO price of $10. Blue Apron closed at $7.41.
- Online health information site WebMD agreed to bought by private equity KKR for $66.50/share, which was a 20.5% premium to Friday’s closing price. WebMD also released its earnings which came in at 43 cents, beating analysts’ consensus of 41 cents/share.
Asia-Pacific stocks
Hong Kong
Analyst ratings
- Alibaba (BABA): Raised to buy at Blue Lotus, PT $162
- ASM Pacific (522 HK): Initiated at Mizuho with Buy; PT HK$140
- Brilliance China (1114 HK): Assumed Underperform at Jefferies, PT HK$11.70
- BTG Hotels Group (600258 CH): Upgraded to Buy at GF Secs
- Champion REIT (2778 HK): Raised to Neutral at Goldman; PT Raised to HK$5.80
- Chongqing Changan Auto (200625 CH): Assumed Underperform at Jefferies
- Dongfeng Motor (489 HK): Dongfeng Motor H Shares Assumed Hold at Jefferies
- ENN Energy (2688 HK): ENN Energy Upgraded to Buy at Mizuho; PT Raised to HK$63
- Geely Auto (175 HK): Assumed Underperform at Jefferies, PT HK$14.80
- Great Wall Motor (2333 HK): H Shares Assumed Hold at Jefferies
- Great Wall Motor (2333 HK): H Shares Cut to Sell at Daiwa; PT Cut to HK$8
- Guangzhou Auto (2238 HK): H Shares Assumed Buy at Jefferies, PT HK$21.50
- Hualan Biological (002007 CH): Cut to Hold at Maybank; PT Lowered to 31 Yuan
- SAIC Motor (600104 CH): Assumed Buy at Jefferies, PT 38.10 Yuan
- Wuliangye Yibin (000858 CH): Raised to Overweight at Morgan Stanley
Preview
- Ali Pictures (1060 HK): Unit to Buy Hangzhou Aurora Stake
- Avic Helicopter (600038 CH): Chinese Defense Stocks March Higher as Catch-Up Play Seen
- China Hongqiao (1378 HK): 2018 Bond Drops 0.7 Point After S&P Rating Cut
- China Merchants Bank (600036 CH): First Half Preliminary Net 39.3 Bln Yuan
- Cosco Shipping Holdings (1919 HK): Advances to 19-Month High on Optimism for Rates
- Goodbaby Intl (1086 HK): Goodbaby Intl to Buy Baby Care Products Co. for $360m
- Guotai Junan Sec (601211 CH): Says Controlling Holder Sold Some Convertible Bonds
- Hainan Airlines (900945 CH): Serbia Says China’s Hainan Airlines to Start Flights to Belgrade
- Meitu (1357 HK): Kingkey Enterprise Sold 37.5m Meitu Shares July 17: Filing
- Shanghai Electric (601727 CH): Plans JVs With CNNP, FANUC, Shanghai Airport
- Sunac (1918 HK): Sunac China offers 220M Shares in Top-Up Placement: Terms
- Zhejiang Dahua Tech (002236 CH): Dahua Technology Prelim. 1H Net 983m Yuan
Japan
Analyst ratings
- Acom (8572), Credit Saison (8253): Rated new neutrals at Mizuho
- Aeon Financial (8570), Orix (8591): Rated new buys at Mizuho
- Aiful (8515): Rated new underperform at Mizuho
- Hitachi High-Tech (8036): Rated new neutral at JPMorgan
- Screen Holdings (7735): Initiated at JPMorgan with neutral
- Seven Bank (8410): Rated new equalweight at Morgan Stanley
- Sinfonia Technology (6507): Rated new neutral at Daiwa
- Tokyo Seimitsu (7729): Rated new neutral at JPMorgan
- Ulvac (6728): Initiated at JPMorgan with overweight
Preview
- AD Works (3250): 1Q operating profit more than triples to 407m yen
- Ajinomoto (2802): Applies to buy remaining 50% stake in Turkey’s Kukre Gida
- Daio Paper (3880): 1Q operating profit -80% to 1b yen, Nikkei says
- Hulic (3003): 1H operating profit +20% to more than 30b yen, Nikkei says
- Japan Airlines (9201): Forms alliance with Vietjet in Vietnam, Nikkei reports
- Kabu.com Securities (8703): 1Q net income -24% to 1.42b yen
- Kirin Holdings (2503): Preliminary 1H operating profit 79b yen vs co. forecast 55b yen
- Koei Tecmo (3635): 1Q operating profit -17% to 984m yen, net income nearly triples to 3.06b yen
- Marumae (6264): Seeks ~1.75b yen in public share sale
- Mitsubishi Tanabe (4508): To buy NeuroDerm in $1.1b deal
- Nitori Holdings (9843): July same-store sales +9.2% y/y
- NTT Docomo (9437): 1Q operating profit ~280b yen, Nikkei says; Bloomberg est. 300b yen
- Orix (8591): Said to be planning offer for Equis Energy’s renewable power business
- Panasonic (6752): Announces multi-year sponsorship deal with New York Yankees
- Right On (7445): July same-store sales -11.4% y/y
- Shin-Etsu Polymer (7970): Forecasts 18% y/y increase in operating profitto 6.5b yen for year ending March 2018
- Shionogi (4507): Firm’s endonuclease inhibitor for treating flu, S-033188,meets Phase 3 primary endpoint
- Showa Denko (4004): Lifts full-year operating profit forecast 10% to 60b yen; cuts net income outlook 16% to 21b yen; to sell shares in Indonesia Chemical Alumina
- Solxyz (4284): Lifts full-year net income forecast 25% to 500m yen
- Sumitomo Corp (8053): Acquires 47.6% stake in Pacific BioEnergy Corp., a Canadian manufacturer of wood pellets
- Takara Leben (8897): 1Q operating profit +25% to 3.8b yen
- Toa Oil (5008): Preliminary 1H operating profit 490m yen vs co. forecast 1.7b yen
Australia
Analyst ratings
- Woodside (WPL): Raised to buy at Morningstar
- Fletcher Building (FBU): Raised to neutral at Forsyth Barr, PT NZ$7.50
- SpeedCast (SDA): Cut to hold at Morgans Financial, PT A$3.87
- AGL Energy (AGL): Raised to hold at Morningstar
Preview
- Aussie inflation may fizzle as commodity boom loses steam: Chart
- Aristocrat Leisure (ALL): Peer Scientific Games reported 2Q rev. that beat highest est.
- Coca-Cola Amatil (CCL), Woolworths (WOW): CC-Amatil to see more products removed from Woolworths: AFR
- Fortescue (FMG): Iron ore rises 1.1%, snapping 2-day losing streak, according to a price index compiled by Metals Bulletin
- NextDC (NXT): Could be among potential bidders for Metronode data centers: AFR
- OZ Minerals (OZL): 2Q production report expected; NOTE: Co. in April forecast 2017 gold output 125k-135k ozs, copper output 115kt-125kt
- Rio Tinto (RIO): Faces corruption investigation by U.K. prosecutors
- Seven Group (SVW): Caterpillar June machine sales rise; Asia-Pacific sales +40% vs May 49% rise; NOTE: is authorized dealer in West Australia, NSW, North China
- Telstra (TLS): NBN chief says co. to review internet pricing: Financial Review
- Viva Energy REIT (VVR): Trades ex-div.
- Whitehaven (WHC): European 2018 coal drops most in 2 weeks as German power falls
- WorleyParsons (WOR), Oil Search (OSH), Beach Energy (BPT), Karoon (KAR), Origin Energy (ORG), Santos (STO): Oil rises as Saudis to cut exports, Halliburton sees shale peak
– 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.
All material contained herein is provided for your general information. The information and commentaries are not intended to be and do not constitute financial advice, investment advice, trading advice or any other advice or recommendation of any sort offered or endorsed by Saxo Capital Markets Pte. Ltd. (“SCM SG”). Any expression of opinion (which may be subject to change without notice) is personal to the presenter and/or author; they do not reflect the view or opinion of SCM SG or its affiliates, neither do they constitute an endorsement of SCM SG’s view or analysis of the same.
None of the information contained here constitutes an offer to purchase or sell a financial instrument, or to make any investments. SCM SG does not take into account your personal investment objectives or financial situation and makes no representation and assumes no liability as to the accuracy or completeness of the information nor for any loss arising from any investment based on any commentaries or information provided here.
For further information, please click here.
Saxo Capital Markets Pte Ltd ("Saxo Capital Markets") is a licensed subsidiary of Saxo Bank A/S, an online trading and investment specialist. Saxo Capital Markets serves as the APAC headquarters and holds a capital markets services licence under the Monetary Authority of Singapore; and a commodity broker licence issued by the International Enterprise Singapore. Clients can trade Forex, CFDs, Stocks, Futures, Options and other derivatives via SaxoWebTrader and SaxoTrader, the leading multi-asset online trading platforms.
Trading risks are magnified by leverage - losses can exceed your deposits. Trade only after you have acknowledged and accepted the risks. You should carefully consider whether trading in leveraged products is appropriate for you based on your financial circumstances. Please consider our Risk Warning and General Business Terms before trading with us. Please see full General Disclaimer.
Thousands of serious traders receive free news and analysis from Saxo Capital Markets each day. Saxo Capital Markets never sends these emails unsolicited; they are sent following acceptance of your membership and subscription request by Saxo Capital Markets at saxomarkets.com.sg. If you do not wish to receive any emails from Saxo Capital Markets in the future, please reply to this email with the word "UNSUBSCRIBE" in the subject header.
Copyright | Disclaimer | Risk Warning | Privacy Policy | Contact Us
Samsung Hub | 3 Church Street | # 30-01 | Singapore 049483
Company No. 200601141M