Wednesday's Federal Open Market Committee outing saw the US central bank take a slightly more hawkish stance than was expected. Equities took only a minimal hit but the long-term impact on emerging markets could prove far more severe,
Article / 12 June 2017 at 1:39 GMT

Morning Report APAC: Asian shares open lower amid UK political turmoil

APAC Sales Trading Desk / Saxo Capital Markets


  • Theresa May tweaks cabinet in an effort to suppress dissent  
  • PM's office admits May hasn't yet reached a deal to govern with DUP
  • US Attorney General Jeff Sessions will testify on Tuesday before Senate 
  • Macron’s party projected to have won 33% of French first-round parliamentary vote
  • GBP seems to have found good support ahead of 200-day moving average 
  • Gold left vulnerable to profit-taking after three-week buying spree
  • Markets in Australia and Malaysia are closed for holidays

By Saxo APAC Sales Trading

Economic data of the day (Singapore Time)



No speech

Overnight news

UK:  Theresa May's office admitted she hasn't reached a deal to govern with a Northern Irish party after last week's calamitous UK election. The Prime Minister tweaked her cabinet in an effort to suppress dissent but could now struggle to push through plans for a hard Brexit. Foreign Secretary Boris Johnson said "everyone" is backing May in the wake of a report suggesting he'd challenge for the leadership. Ex-chancellor George Osborne was quick to put in the knife. "May is a dead woman walking," he said. 

North Korea: North Korea has moved closer to test-firing an ICBM with the potential of hitting the US mainland, according to Pyongyang's official news agency. 

US: Attorney General Jeff Sessions will testify on Tuesday before the Senate on Russia's meddling in the election as Donald Trump slammed James Comey on Twitter. The president called the ex-FBI director "cowardly" and asked rhetorically if his descriptions of Oval Office conversations were "totally illegal?" Trump said he'd be willing to testify under oath that he didn't demand a pledge of loyalty from Comey. 

France: Emmanuel Macron’s party En Marche won about 33% of the first-round vote in France's parliamentary vote, about 13 percentage points ahead of the Republicans, according to projections based on early vote counts. That may give Macron up to 440 seats out of 577 in the lower house, pollster Kantar Sofres said. The second round is next Sunday.


Foreign exchange



USD was slightly bid on Friday on slight risk aversion. The Nasdaq was down 1.8%.

GBP seems to have found good support ahead of the 200-day moving average at 1.2576 and we should now stay in that range with a good resistance at 1.3000.

The victory of the French party En Marche was priced in but this should keep EUR supported anyway.

Emerging Markets: USD was slightly bid overnight in EM. USDBRL is still trading on a tight range above the 200-day MA after a majority of judges on Brazil’s top electoral court, known as TSE, voted to back the mandate of President Michel Temer.

Foreign exchange movement



The whole curve was market lower in GBP after the UK election. There is still some interest in two month to three month downside.


US Treasuries fell with this week’s key risk events fading off and looking to next week’s front-loaded auction schedule and Wednesday’s FOMC decision .

Gilt 10-year yields closed lower after a choppy session on the surprise UK election outcome, while Italian bonds continue to rally on the dovish European Central Bank outlook.






Tech stocks that have been soaring in 2017 were making an intraday high on early Friday before they headed for a massive plunge, with the Nasdaq losing 1.8%. The Dow was the best performer, up 0.4%, while S&P 500 was flat as it retreated 0.08%.

Among the popular tech names, Apple retreated 3.88% while Nvidia, which recently got a massive upgrade from analysts, also slumped 6.5% and was one of the biggest losers.

The European market was led by the FTSE 100, which gained 1.04% on Friday despite futures gapping down and opening on the low on Friday on the UK election. 

The FDA is asking Endo international to remove the opioid pain medication Opana ER from the market. Opioids, a broad class of drugs including heroin, fentanyl, morphine and prescription pain relievers such as oxycodone, are highly addictive medicines that have set off a crisis for patients. The FDA said it would pull approval of the drug if Endo did not comply with its request. The drug maker retreated 16.6% on Friday.

Pandora Media cancelled an arrangement with private equity firm KKR and instead linked up with Sirius XM in a $480 million deal. Shares initially rose 6% on the news but finally were only up by 1.2% The deal is $480m in newly issued convertible preferred stock of Pandora, paying 6% dividend yearly. Pandora closed at $8.52.

Asia Pacific Stocks

Hong Kong

Analyst Ratings:

  • Tus-Sound Environmental (000826 CH): Rated new buy at Qilu Securities, PT 40 yuan


  • Developers: HK home prices rise 0.09% on week: Centaline; China to let Taiwan workers access public housing fund: Xinhua; HK to cut public housing unit offerings to 25,400: Oriental; HK government to sell site in Sha Tin by public tender
  • Coal: Shandong province to to cut 3.51m tons of annual coal capacity in end-Aug: Xinhua
  • Food producers: China corn seen in deficit for first time in 7 years: CNGOIC; China sees bumper grain harvest this summer: Ag Ministry
  • Insurance: China may require insurance coverage on potential polluters
  • Internet services: Regulator closes some celebrity gossip accounts
  • Refiners: China cuts fuel prices from Saturday; China teapots raise run rate to highest level since mid-April
  • Steel: EU imposes duties to counter Chinese steel subsidies
  • Bocom International (3329 HK): Over-allotment option of about 10.16% offer shares exercised
  • Baosight (601601 CH), Pacific Insurance (900926 CH) plan cooperation on data service
  • Baosteel (600019 CH) keeps July hot-rolled steel prices flat
  • China Railway Construction (1186 HK): Consortium wins 17.9bn yuan road project
  • China Resources Land (1109 HK) May contract sales 12.1bn yuan
  • China Shenhua Energy (1088 HK): Planning significant matter, A-shares to stay suspended
  • China Vanke (2202 CH): Evergrande (3333 HK) to sell stake in China for $4.3bn; Shenzhen Metro says it will support Vanke’s board reshuffle, to be largest shareholder
  • ICBC (601398 CH): Vale signs $2bn revolving credit line
  • Kaisa (1638 HK): Said to indicate minimum yields for new bonds
  • Man Wah (1999 HK): Bought back 18.3m shrs for HK$123.7m June 9
  • Minsheng Bank gets CBRC approval for Tier-2 capital bonds
  • Sunny Optical (2382 HK): May handset lens sets shipments rise 87.1% on year
  • Yanzhou Coal (1171 HK): Glencore (805 HK) submits rival proposal for Rio’s Coal & Allied unit; Yanzhou coal sees its bid clearing regulators by end of June


Analyst Ratings:

  • H2O Retailing (8242): Cut to neutral Plus at Iwai Cosmo
  • IHI (7013): Upgraded to buy at Mizuho
  • Kitz (6498): Raised to outperform at Daiwa
  • Mizuno (8022): Raised to neutral at MUFJ-MS
  • Nissha Printing (7915): Upgraded to overweight at JPMorgan
  • Okinawa Electric (9511): Cut to underweight at MUFJ-MS
  • Sodick (6143): Rated new neutral plus at Mito Securities
  • Square Enix Holdings (9684): Cut to outperform at Daiwa
  • Taisho Pharma (4581): Cut to underperform at Credit Suisse
  • THK (6481): Raised to outperform at Daiwa
  • TS Tech (7313): Raised to neutral at MUFJ-MS


  • Astellas Pharma (4503): Together with Pfizer sees Enzalutamide trial completing two years early
  • Don Quijote Holdings (7532): May store sales up 2.8% y/y
  • Finance industry: Tokyo to reduce city taxes for financial firms to bolster transactions
  • Giken (6289): Seeks 3.33bn yen from public share sale
  • Gumi (3903): Swings to full-year net profit of 1.4bn yen from 3.3bn yen loss a year ago
  • Hitachi Zosen (7004): Restates FY earnings to correct cash flow figure
  • KOMEDA Holdings (3543): To conduct secondary share sale
  • Nadex (7435): Preliminary full-year net income at 1.3bn yen, beating company forecast by 61%
  • Neojapan (3921): To conduct 2-for-1 stock split on July 1
  • Orix (8591): Said to explore bidding for $4bn Equis renewable assets
  • Round One (4680): May same-store sales fall 0.2% y/y
  • Sekisui House (1928): 1Q net income 69% y/y to 25.8bn yen, keeps full-year outlook unchanged
  • Shimadzu (7701): Suspended from Japan defense ministry equipment contracts



Ex-UK chancellor George Osborne was quick to put in the knife: "May is a dead woman walking," he said. Photo: Shutterstock


– Edited by Susan McDonald

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