Article / 07 December 2016 at 2:23 GMT

Morning Report APAC: Asian shares rise, AUD sputters

APAC Sales Trading Desk / Saxo Capital Markets
Singapore
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  • Asian shares mostly edge up with the Asia-Pacific index rising 0.2% 
  • AUD hits 74.17 US cents as government spending fell and imports rose
  • AUD drops 0.6% as the country's economy shrank by the most since 2008
  • Japan’s currency weakened further past 114 per dollar, as USD rekindles
  • West Texas Intermediate crude slipped 0.1% to $50.90/barrel
  • Spot gold slipped 0.2% in early Wednesday trading to $1,167.73/oz

By Saxo APAC Sales Trading


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Speeches


09:30: JPY – Bank of Japan deputy governor Iwata gives speech in Nagasaki

Overnight news

US: The trade deficit for goods and services surged 17.8% month on month to a seasonally adjusted $42.6 billion (expected deficit: -$42bn), the steepest one-month increase since March 2015.

Exports dropped 1.8% MoM, the biggest drop since January, due to declining shipments of soybeans, corn and consumer goods.

Imports climbed 1.3% MoM on the back of demand for foreign-made pharmaceuticals, cellphones and capital goods
 
New orders for manufactured goods increased 2.7% (expected: +2.6%). Unfilled factory orders rose 0.7%, the largest increase since July 2014.

Orders for transportation equipment spiked 12%. Motor vehicle orders declined 0.7%.

There were increases in orders for computers and electronic products, capital goods, and electrical equipment, appliances and components.

Orders for machinery were unchanged. Orders for non-defense capital goods excluding aircraft - a key measure of business confidence and spending plans - went up 0.2%, down from the initial estimate of +0.4%.

Shipments of core capital goods, which are used to calculate the business equipment spending component of GDP, dipped a revised 0.1% (previous: +0.2%).
 
Australia:
GDP came in much lower than expected at -0.5% quarter on the quarter (expected -0.1%) and 1.8% (expected 2.2%) from a downward revision of 3.1% (previous 3.3%).







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The profit taking in long USD seems to be over for now and some buyers re-emerged but the market was overall range-bound overnight.

AUDUSD
dropped 40 pips following the poor GDP numbers. The first short-term support is 0.7370 with a strong resistance at the 200 Day Moving Average at 0.7531.
 
In emerging markets, the USD remains biddish and USD/Asia rallied this morning after the Australian GDP numbers.

The interest remains mild though at this level. USDSGD is well supported at 1.4200.

Foreign exchange movements

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There were sellers of USDJPY gamma due to spot trading in a tight range and realised volatilities coming off. The market is buying the European Central Bank dates for ATM and downside strikes.
 
Strong interest in the 2 month USDCNH yesterday for Upside strikes. Looks to be a large Fund flow on the back of that. 

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Ten-year US treasury bonds failed to recapture the 2.4% resistance level as yields held steady overnight.

The 10-year Greece sovereign bond yield rose 19.7 basis points to 6.61% as Greece received short-term relief from the Eurozone.

Despite the short-term help in the form of smoothing Greece repayment, market could be expecting more help on their heaping debt load.

In Australia, the Reserve Bank of Australia left the key rate at 1.5% in late morning yesterday - which was widely predicted by all economists.

Quarter-on-quarter GDP data in Australia also fell short of expectations in this morning's release which could potentially put pressure on yields.

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US indices continue to grind higher as the Dow Jones Industrial index made yet another record close on Tuesday.

Goldman Sachs is the best performer in the list and the blue-chips index also posted its 11th record close since the election.

The US small cap index, the Russell 2000, has outperformed the three major indices since November 8, gaining 17% as compared to the 7% surge in DJI.

The European market traded higher with the Stoxx Europe 600 index rising 1%. Italy’s FTSE MIB Index jumped 2% and was largely helped by gains from Italy banks - UniCredit and Mediobanca  which were up 9%.

Netflix (NFLX) jumped Tuesday on a stock upgrade and news about the company's latest moves to increase its original programming.

It rose 4.5% to $124.57 on the stock market today. The television content provider finally broke the $120 resistance convincingly after as Netflix continues to find support on the 50 DMA.

Toll Brothers (TOL:xnys) Shares rose 4.8% to 31.94 in the stock market today after closing up 3.9% to 30.47 on Monday.

Toll reported adjusted quarterly profit of $1.15 per share, 16 cents above estimates with the revenue also beating forecasts. The stock has been supported its key 50-day and 200 DMAs.


Asia Pacific Stocks

Hong Kong
 
Analyst ratings
-          China National Materials (1893 HK): Raised to outperform at Credit Suisse
-          TCC Intl (1136 HK): Cut to neutral at Credit Suisse
-          Zhaojin Mining (1818 HK): Raised to neutral at Macquarie

Preview
-          Banks: Guangdong regulator said to tighten rules on bank investments
-          Developers: China property, financial risks increase, researcher says: Xinhua
-          Infrastructure: China to encourage investment in rural areas
-          Rare earth: China to examine low-price rare earth exports: Sec. News
-          China Longyuan (916 HK): Nov. power generation rises 40% on year
-          Country Garden (2007 HK): Jan.-Nov. contract sales 288.1b yuan
-          Great Wall Motor (2333 HK): Nov. vehicle sales rise 43% on year
-          Guangzhou Auto (2238 HK): Nov. sales volume 174,354 units
-          Huayi Brothers (300027 CH): Terminates plan to buy mobile game co. stake
-          Midland IC&I (459 HK): Says 2016 net profit to exceed the HK$2m in 2015; Jan.-Nov. cons. net was ~HK$15m
-          Minmetals Land (230 HK): Agrees to buy 33.3% stake in Kuangji Properties from China Resources Szitic Trust for 2.24b yuan
-          Neusoft (600718 CH): Says shareholder plans to boost co.’s stake by 5%-10%
-          PetroChina (857 HK): Says Zhao Dong tendered resignation as CFO
-          Shui On Land (272 HK): Jan.-Nov. property contract sales rise 56% y/y
-          Spring REIT (1426 HK): Proposes to buy co. owning 84 commercial properties in U.K. for 73.5m pounds
-          Titan Petrochemical (1192 HK): Hong Kong starts proceedings against Titan affiliate ex-official
 
Japan

 
Analyst ratings
-          Kyoei Steel (5440 JP): Cut to neutral at Credit Suisse
-          Mitsui Mining (5706 JP): Raised to outperform at Daiwa
-          Monex (8698 JP): Upgraded to neutral from underweight at JPMorgan
-          Net One Systems (7518 JP): Cut to underweight from neutral at Mitsubishi UFJ Morgan Stanley
-          Oji Holdings (3861 JP): Cut to neutral at Okasan
-          Panasonic (6752 JP): Cut to neutral at Okasan
-          Resona (8308 JP): Raised to outperform from neutral at Daiwa
-          Sumco (3436 JP): Rated new positive at Storm Research
-          T&D Holdings (8795 JP): Cut to neutral from overweight at Mitsubishi UFJ Morgan Stanley
-          Tokyo Electron (8035 JP): raised to outperform at Tokai Tokyo
-          Topcon (7732 JP): Raised to neutral from underweight at Mitsubishi UFJ Morgan Stanley

Preview
-          Future Corp. (4722 JP): To buy YDC Corp. stake from Yokogawa Electric (6841 JP) for 2.04b yen
-          McDonald’s Japan (2702 JP): Nov. same-store sales +11.3% y/y
-          Mitsubishi UFJ Financial (8306 JP): Morgan Stanley MUFG faces 220m yen fine for manipulating share price of Seibu (9024 JP)
-          Nidec (6594 JP): Acquires Canton Elevator; no terms disclosed
-          OSG (6757 JP): 9-month operating profit +22% y/y to 458m yen; maintains full-year target at 700m yen
-          SMS (2175 JP): Seeks to raise 6.93b yen in share sale
-          Sohgo Security Services (2331 JP): To acquire 90% stake in Hitachi Security Service from Hitachi (6501 JP); no terms disclosed

Australia
 
Analyst ratings
-          TRANSURBAN RAISED TO BUY VS HOLD AT MORNINGSTAR
-          ORIGIN ENERGY CUT TO UNDERPERFORM VS NEUTRAL AT CREDIT SUISSE
-          BAPCOR RAISED TO BUY VS NEUTRAL AT UBS
-          REA GROUP RAISED TO BUY VS NEUTRAL AT UBS
-          REGIS RESOURCES RAISED TO BUY VS SELL AT UBS
-          CARSALES.COM CUT TO NEUTRAL VS SELL AT UBS
-          ORIGIN ENERGY CUT TO NEUTRAL VS OVERWEIGHT AT JPMORGAN
-          BENDIGO & ADELAIDE CUT TO SELL VS HOLD AT SHAW & PARTNERS

Preview
-          Rio Forecasts 525,000-665,000 Tons of Mined Copper Next Year
-          Sierra Rutile Says Merger With Iluka Expected to Close Dec. 7
-          Alacer Gold cuts 2016 production, cost views

Sources: CIMB / Bloomberg

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Hit hard: The AUD plummeted in Asia trade as Aussie GDP contracted in Q3. Photo: iStock


– Edited by Adam Courtenay


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