Morning Report APAC: Asian markets up on oil's hesitant rise
- Asian markets were slightly up in early trade as oil rose
- The RBNZ held the key rate at a record low of 1.75% as expected
- The USD was range bound overall with no clear direction
- USDCAD has been rallying on the back of oil lower and on stops
By Saxo APAC Sales Trading
Economic data of the day (Singapore Time)
- 0930 – JN – Bank of Japan Kikuo Iwata speaks in Aomori
- 1600 – EC – European Central Bank publishes economic bulletin
- 2200 – US – Federal Reserve’s Jerome Powell speaks before senate banking committee
- 0200 – UK – Bank of England's Kristin Forbes speaks in London
Reserve Bank of New Zealand
- The RBNZ held the key rate at a record low of 1.75% as expected. RBNZ Governor Graeme Wheeler said: “The trade-weighted exchange rate has increased by around 3% since May, partly in response to higher export prices. A lower New Zealand dollar would help rebalance the growth outlook towards the tradables sector.” But he also noted the currency’s recent gains were partly driven by higher export prices.
- Wheeler added that: “Monetary policy will remain accommodative for a considerable period. Numerous uncertainties remain and policy may need to adjust accordingly.”
- “Non-tradables and wage inflation remain moderate but are expected to increase gradually,” Wheeler said today. “This will bring future headline inflation to the midpoint of the target band over the medium term.”
- “Nevertheless, the growth outlook remains positive, supported by accommodative monetary policy, strong population growth, and high terms of trade,” Wheeler said. “Recent changes announced in Budget 2017 should support the outlook for growth.”
- Bank of England Chief Economist Andy Haldane said the risks of leaving policy tightening too late are rising, and that it'd be prudent to start withdrawing stimulus in the second half. UK money-market rates jumped, boosting the probability of a 25-basis-point move this year to 60% from around 20%.
- USD was range bound overall with no clear direction except for oil-related currencies and GBP.
- GBP was bid following the comments from the BoE chief economist and holds well above the 200d MA at 1.2552. The range remains 1.2550 / 1.3000 on the wide.
- USDCAD has been rallying on the back of oil lower and on stops. The market is very short following the BoC meeting. The main resistance is at 1.3400.
- Emerging Markets: USDEM was mixed overnight with KRW still caught in the risk-off mode trading now at the resistance made with the 200d MA at 1145.32 and the oil-related currencies like USDRUB extremely bid and breaking the 200d MA at 59.8974.
Foreign exchange volatilities
- Hedge funds are picking up volatilities in GBP buying vega in the six months to one year area, mainly ATM with uncertainties surrounding the Brexit negotiations.
- UST was mixed with 2-year and 5-year yields higher by 0.5 basis points, while 30-year yields reached YTD lows at 2.72%. 5s30s ended session on the flattest levels as 95.5bp level was breached, taking the spread to fresh nine-year lows.
- Gilts fell following hawkish comments from BoE’s Haldane, the curve flattened as appetite for long-end debt remained strong.
- Dow was the biggest loser yesterday, down 0.27% as it saw intraday support at 21,400. Nasdaq once again was the best performer with a 0.74% gain while S&P500 was flat. Oil price trading at a seven-month low could be a drag for the global equities to go higher.
- In Europe, markets finished lower today while shares in France led the region as it finished 0.37% lower while London's FTSE 100 and Dax also closed about 0.30% lower.
- AMD was up by 10.60% after it unveiled its EPYC server processors. Its re-entry back into the server market was welcomed by analysts as the positive analyst commentary. The server market is currently dominated by market leader Nvidia and Jefferies Securities expected AMD to have 7% of the market share by the end of next year. Meanwhile Intel traded 0.8% lower but manage to recover most of its intraday losses.
- Oracle was climbing over 8% in after-hours trading on Wednesday after reporting stronger-than-expected fourth quarter financial results. EPS came in at 89 cents/share, which beat analysts’ consensus at 78% with also higher revenue.
- CCS Supply Chain Management (600180 CH): New Buy at Cinda Securities
- Tianjin Guangyu (000537 CH): New Buy at GF Secs
- Huadian Fuxin (816 HK): New Buy at ICBCI, PT HK$2.30
- Huagong Tech (000988 CH): Raised to Buy at Sealand Securities
- Huaneng Renew (958 HK): New Buy at ICBCI, PT HK$3.40
- Longyuan Power (916 HK): New Buy at ICBCI, PT HK$7.10
- Wanhua Chem Group (600309 CH): Initiated at GF Secs with Buy
- Xinjiang Goldwind (2208 HK): New Hold at ICBCI, PT HK$12.80
- Passive Funds of $8b-$10b to Flow to China Market on MSCI Inclusion:Sec. Journal
- Developers: Hong Kong Awards Residential Site in Tuen Mun for HK$3.17b
- Energy: China to Adjust On-Grid Power Tariff Structure: The Paper
- AAC Technologies (2018 HK): Buys Back 500,000 Shares for HK$47.8m June 21
- Aier Eye Hospital (300015 CH): Wins Chinese Regulatory Clearance for Baviera Bid
- China Gas (384 HK): China Gas FY Net Beats Estimate
- China Southern (1055 HK): Boeing, Xiamen Airlines Sign MOU for Ten 737 Max 10 Airplanes
- CK Infrastructure (1038 HK): CVC’s Ista Metering Unit Said to Draw Bids From Blackstone, CKI
- Country Garden (2007 HK): Yang Huiyan Bought 3m Shares June 15: Filing
- Geely Auto (175 HK): DRB-Hicom, Geely to Sign Definitive Pact on Proton This Friday
- Guangzhou Auto (2238 HK): To Cooperate With Huawei on Big Data, New Energy
- ICBC (601398 CH): Plans 50b Yuan Tentative Credit Line to CNPC Capital
- Sinopec (386 HK): Discuss Cooperation With JD.com on Logistics, Finance
- Tencent (700 HK): Joins China Rivals in Offering AI Services: The Paper
- UBS on banks:
- Mizuho Financial (8411): Raised to neutral
- Shinsei (8303): Raised to buy
- Sumitomo Mitsui Financial (8316): Raised to buy
- Sumitomo Mitsui Trust (8309): Raised to neutral
- Alps Electric (6770): Raised to outperform at Mito Securities
- Asahi Intecc (7747 JP): New buy at Daiwa, PT 7,000 yen
- Balnibarbi (3418): Raised to buy at Ichiyoshi
- DIC (4631): Moody’s upgrades co.’s rating to Baa2
- Kureha (4023 JP): New outperform at Iwai Cosmo, PT 7,200 yen
- Kureha (4023 JP): Initiated outperform at Iwai Cosmo, PT 7,200 yen
- Ryohin Keikaku (7453): Cut to neutral at JPMorgan
- Sumitomo Mitsui Financial (8316): Cut to underweight at MUFJ-MS
- Sumitomo Mitsui Trust (8309): Cut to neutral at MUFJ-MS
- Tourism industry: Visitors to Japan +21.2% y/y to almost 2.3m in May, according to Japan National Tourism Organization
- Daiichi Sankyo (4568 JP): Delhi Court to Hear Daiichi Contempt Plea on Singh Brothers Cos.
- HIS (9603 JP): Visitors to Japan Surpass 10m in First 5 Months of 2017, JNTO says
- Hokkaido Electric (9509 JP): Morgan Stanley Units Cut Stake in Hokkaido Electric to 3.2%
- Hokkaido Electric (9509 JP): Morgan Stanley Units Had Held 7.96% of Hokkaido Electric
- Inpex (1605 JP): Japan’s Inpex to Form LNG Trading Unit to Improve Flexibility
- Kawasaki Heavy Industries (7012): To enhance manufacturing collaboration with Boeing
- Mitsubishi Corp (8058 JP): GE to Supply Turbines for 66MW Wind Farm in Northern Japan
- Sharp (6753 JP): Sharp Removed From TSE Watchlist After Restoring Net Worth
- SoftBank (9984): Invests $100m in security startup Cybereason
- Sumitomo Dainippon (4506): Granted orphan drug status by FDA
- Takata (7312): TSE to expand lower limit for Takata shares Thursday
- Toshiba (6502): Japan parties to hold more than 66% stake in co.’s chip business, TBS reports
- Yamato Holdings (9064): To book about 4b yen charge on wages
- Breville (BRG): Cut to neutral at Credit Suisse, PT A$10.75
- Doray Minerals (DRM): Raised to buy at Argonaut Securities, PT A$0.43
- Isentia (ISD): Cut to hold at Morningstar
- South32 (S32): Raised to market perform at Avior Capital Markets
- Sundance Energy (SEA): Cut to neutral at Seaport Global, PT $4.25
- AMP (AMP): Close to reinsurance deal which may release A$300m-A$500m capital: AFR
- Carsales (CAR): Aussies buying more cars than ever despite miserly wage gains
- Crown Resorts (CWN): Robert Rankin resigns as director
- Monadelphous (MND): Wins 5-yr Woodside contract worth ~A$600m
- News Corp. (NWS): Holds advanced talks with Facebook on subscriptions
- Rio Tinto (RIO): Glencore seen mulling fresh Rio Aussie bid as Yancoal gets nod
- Westpac (WBC): Prices $1.5b debt offering in two parts
- Woodside (WPL), WorleyParsons (WOR), Oil Search (OSH), Beach Energy (BPT), Karoon (KAR), Origin Energy (ORG), Santos (STO): Brent joins U.S. crude in bear market amid oversupply anxiety
in early Asian trade. Photo: Shutterstock
– Edited by Gayle Bryant
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