Morning Report APAC: Asian stocks soar on Wall Street rally
- US jobless claims came in much better than expected
- USD rallied overnight on Fed rate hike comments and strong Durable Goods data
- The passing of a US budget resolution is a sign of progress toward the tax bill
- Gold prices retreated, while silver held steady
- Copper hit a three-week high on supply concerns
- Raw sugar found a firm footing above its 50-day and 100-day moving average lines
By Saxo APAC Sales Trading
Economic data of the day (Singapore Time)
Speeches (Singapore Time)
- 2000 - UK: Bank of England chief economist Andrew Haldane Speaks at Event in London
- 2115 - US: Atlanta Fed President Raphael Bostic Speaks at Workforce Conference
- 2130 - FR: ECB's Francois Villeroy de Galhau, Ewald Nowotny Speak in Vienna
- 0015 - US: Fed's William Dudley to Speak on Monetary Policy
- 0045 - US: Fed's Robert Kaplan Speaks at Workforce Conference
- 0100 - US: Fed's James Bullard Speaks on Economy in St. Louis
Overnight news, US
- Unemployment claims in US came in much better than expected, 260,000 (actual) vs 266,000 (survey). The number was a decrease of 12,000 from previous week but Hurricanes Harvey and Irma continue to impact the data and thus could make evaluation on the labor market harder.
- The more important news yesterday was the House of Representatives has passed a 2018 budget resolution yesterday which is seen as a prerequisite for working towards the major tax bill. With that, the Senate controlled by the GOP will require a simple-majority vote rather than requiring 60 votes. US stocks rallied as a result with all 3 indices conquering record highs yet again while dollar index continues to strengthens.
Overnight news, Australia
- Retail sales for Australia not only unexpectedly declined for the second consecutive month but also posted its biggest fall since March 2013 as it plunged 0.6%. AUDUSD struggles to hold above 0.780.
Overnight news, Canada
- Trade balance in Canada on August widens on weak exports amid the ongoing appreciation of the Canadian dollar. Trade balance came it at -$3.4bn against survey estimate of -$2.6bn saw CAD being sold off. USDCAD staged a strong rebound as it found firm foothold above 1.25.
- USD rallied overnight following the Fed comments about a rate hike in December and very strong Durable Goods data. The market has talked down the NFP number tonight and is ready to buy USD if we get 50,000 or higher.
- DXY is close to the main resistance at 94.00 now and this is the level to watch tonight after the NFP.
- EURUSD is still trading below the short term resistance of 1.1846 the 50d MA. The near support is at 1.1682 the August 16 low. It has been sticky in the past at this level and the break could happen after NFP tonight. The stops on the topside are increasing fast though
- GBPUSD dropped 1% on the back that Theresa May might be pushed out following her disastrous speech 2 days ago. If that happens, there is no one behind her to take the lead and it’s another 3 months of political uncertainty while BOE wants to hike rates. The near support is at 1.3017, the 100d MA.
- Emerging Markets: USD rallied but slightly only agaainst EM due to the strong buying interest in the equity market. We could get a case to see USD higher against G10 and lower against EM. There are some RV trade to look at like short EUR/EM.
Foreign exchange movements
- We still see sellers in USDJPY gamma, even around the election date.
- USDSGD vol is bid as the market expect the next MAS meeting to be next Friday.
- Spain’s Bono retreated 7.3bps higher as risk of an immediate independence declaration softens.
- The US market has had another strong rally with the Nasdaq leading the charge after strong after the house of representatives passed a 2018 budget resolution on Thursday which is seen as a prerequisite of the major tax bill.
- Spain’s IBEX 35 rebounded strongly as separatist leaders in Catalonia are seeking to avoid an immediate declaration of independence from Spain as officials in Madrid and business leaders in Barcelona ratchet up pressure on the nationalist camp. Catalan banks which were badly battered this week indicated willingness to relocate their headquarters if the proceedings goes on.
- Netflix broke new high as the internet TV network will be hiking 2 out of its 3 U.S streaming plans in November. Netflix cited increasing cost in its content as it is expected to spend close to $7 billion on content for its service next year. Netflix closed 5.39% higher and broke its all-time high in July.
- Constellation Brands rose 4% higher on increasing interest in their Mexican beer as it beat Wall Street’s profit expectations for the 9th straight quarter on higher margins, boosting full year earnings forecasts 30 cents higher as it closed at $209.25. The beverage company traded at its all-time high yesterday as the stock trades on a very nice uptrend channel since 2017 Feb.
Asian equities preview
Hong Kong analyst views
- Bocom (3328 HK): Bocom H Shares Raised to Add at CIMB, price target $HK7.20.
- Citic Bank (998 HK): Citic Bank H Shares Raised to Hold at CIMB, price target $HK5.40.
- Minsheng Bank (1988 HK): Minsheng Bank H Shares Raised to Add at CIMB, price target $HK9.40.
Hong Kong stocks
- CITIC Securities (6030 HK): Australia’s Genea Is Said to Hire Citic For Possible Sale: AFR
Japan analyst views
- Fast Retailing (9983): Raised to buy from neutral at UBS.
- Hirata (6258): Rated new buy at Mizuho.
- Milbon (4919): Cut to sell from neutral at Ichiyoshi Research.
- BlackRock raised stake in Ishikawa Seisakusho (6208); reports new stakes in Howa Machinery (6203), NSK (6471), Net One Systems (7518).
- JINS (3046): September same-store sales +0.4% y/y.
- McDonald’s Japan (2702): September same-store sales +7.3% y/y.
- Nachi-Fujikoshi (6474): 9-month operating profit +36% to ¥11.8bn.
- Nagaileben (7447): Forecasts full-year operating profit +2.5% to ¥5.37bn.
- Nomura Real Estate Holdings (3231): Launches hotel project, operation business.
- Round One (4680): September same-store sales +6.8% y/y.
- San-A (2659): H1 operating profit slips 3.2% y/y to ¥7.8bn; beats company's forecast by 1%.
- Seiko Epson (6724): To spend ¥16bn in printing solutions operations at Hirooka.
- Sumitomo Corp (8053): Energy unit completes 75- megawatt biomass power plant in Aichi prefecture, central Japan.
- Tokyo Gas (9531): Will not sign new LNG contracts with resale restrictions on cargoes, co. President Michiaki Hirose says.
- Tosei (8923): 9-month operating profit +2.9% y/y to ¥9.1bn.
- Toshiba (6502): Bain Capital confirms it plans to take co.’s chip business public in a few years.
Australia analyst views
- Lifehealthcare (LHC): Cut to Neutral at UBS, Price target $A2.30.
- Magellan Financial (MFG): Raised to Buy at Shaw and Partners.
- BHP Billiton (BHP): A Commodity Superpower Asks What If India Turns Out Like China?; Top Iron Ore Miners Boosted Cargoes 4.5% Last Quarter, Bernstein says.
- Fortescue (FMG): Port Hedland Sept. Iron Ore Exports Total 43.4M Tons, Pilbara Ports Authority Says.
- Origin Energy (ORG): Australia Challenging Qatar’s LNG Crown as Exports Set to Soar.
- Rio Tinto (RIO): Appoints Former Xstrata Dealmaker to Lead New Ventures Unit; UBS Increasingly Selective on Miners After Strong Performance.
- Select Harvests (SHV): Said to Get Takeover Proposal From ADIA, AFR Reports, Without Attribution.
- South32 (S32): South32, Boliden Among Miners That Activists Could Target, Citi Says.
- Bank of New York Australia ADR Index is down 0.4% to 269.5.
- BHP Billiton ADRs are up 0.3% to A$26.44 equivalent, a 1.3% premium to last Sydney close.
- Rio Tinto ADRs are up 0.4% to A$62.46 equivalent, an 8.1% discount to last Sydney close.
- Companies trading above 20/50/200 DMAs, Bollinger upper band with RSI above 70: A2M, GXY, MIN, ORE.
- Companies trading below 20/50/200 DMAs, Bollinger lower band with RSI below 30: None.
- Companies trading ex-dividend today: ALR, AUB, GVF, SWL, YTMF07.
- Newcrest (NCM), Northern Star (NST), Evolution (EVN), Saracen (SAR), Regis Resources (RRL), Resolute Mining (RSG), OZ Minerals (OZL): Gold Open Interest Slides as Rate Outlook Mutes Demand.
- Woodside (WPL), WorleyParsons (WOR), Oil Search (OSH), Beach Energy (BPT), Karoon (KAR), Origin Energy (ORG), Santos (STO): Oil Edges Higher as Saudi-Russia Encounter Reassures Oil Bulls.
- BHP Billiton (BHP), Rio Tinto (RIO) and Fortescue (FMG): Iron ore is down 0.9% to $61.48.
– 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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