Morning Report APAC: Central banks in spotlight as stocks edge higher
- WTI rose to 6-week high on the EIA report and Saudi Arabian shipments
- Gold was almost flat on lower Fed rate hike expectations
- Miners will benefit after iron ore has made gains for a third day
By Saxo APAC Sales Trading
Economic data of the day (Singapore Time)
Speeches (Singapore Time)
- 1430 - Japan: Bank of Japan Haruhiko Kuroda speaks at press conference after MPM.
- 2030 - EU: ECB's Mario Draghi Holds Press Conference.
Overnight news, US
- Senate majority leader Mitch McConnell confirmed a vote to repeal Obamacare will take place in the senate next week, despite not having the votes to pass.
- The Congressional Budget Office estimates that a repeal without a replacement of the Affordable Care Act would see 32 million Americans go uninsured.
- According to Politico, the Trump administration has changed its corporate tax objective for the tax reform agenda to a more realistic 20%-25% from 15% giving the move greater hope of a smoother passage through Congress.
- After a period of weakness, US housing data appeared to show tentative signs of a turn around. Housing starts rose 8.3% m/m while building permits increased +7.4% m/m, well above expectations.
- EIA data out in the US showed a greater than expected decline in both crude and petrol inventories, resulting in a more than 1.5% bounce in oil.
- In Canada, manufacturing sales picked up sharply from a poorly revised number to beat expectations with a +1.1% m/m increase vs 0.8% expected.
- Morgan Stanley reported better than expected earnings at $0.87 vs$0.77 estimates. FICC trading revenues declined by -3% which looks comparatively strong versus its investment banking peers.
Overnight news, Europe
- ECB governing council member François Villeroy said that the risk to deflation was now gone but there was still more to do to for the central bank to reach its 2% target.
- USD: recouped some early losses in a mixed trading day as the market removed risk prior to today’s ECB and BoJ events. Broad ranges were maintained.
- AUD: Strength in the AUD continues with the currency once again the top performing G10. Now up 3% inside of 5 days. The AU jobs data will be a key input in ascertaining whether the AUD can continue its current trend.
- NOK: The Norwegian krone was again the second best G10, as oil rallied after the release of the EIA inventory data. Positive NOK momentum carried the currency to its strongest level since April against the euro, and its strongest versus the USD since October 2016. USDNOK is approaching massive support levels below 8.00, which is not only multi-year lows but also the 23.6% retracement of the entire move from the 2008 lows to the 2016 highs.
- Emerging Markets: Fairly quiet day in EM space with RUB catching a small bid on stronger oil prices, while the central European currencies fell. The PLN (Polish Zloty) fell sharply, following comments from EU commissioner Frans Timmermans that it was close to triggering Article 7, which constitutes a breach of common values for the 28-country bloc, driven by criticism of the current government's rule of law.
Foreign exchange movements
- Market is short downside on the USDJPY vol for the next week with strikes below ¥111. The spot has moved more than expected.
- EUR is seeing surprisingly little interest given today’s ECB decision.
- AUD market is still short between 0.7950 and 0.80, a rising spot should therefore engender another leg higher in vols.
- US yields barely changed as no directional catalyst was observed, good US housing data was not able to boost the market’s confidence. USD spreads widened led by long end.
- European yields was slightly lower thanks to solid 30y bund sale, thin volume trading before ECB meeting today
- The Nasdaq and the S&P 500 hit record high once again on the back of a bigger than expected draw down in oil inventories in the weekly EIA data as crude rose 1.5%.
- Morgan Stanley posted a strong earnings with a 87 cents per shares earnings that beat consensus at $0.76 per share. MS showed resilience in their trading revenue which was a concern for all the banks so far as it lifted the Morgan Stanley to close 3.28% higher.
- IBM shares dropped 4.2% after its report, holding back the Dow's gains as the Dow constituent dropped to its 52 week low, pressuring for change as all five of IBM's reporting segments registered sales declines
- Vertex Pharmaceuticals Inc soared 20.8 percent after the company reported stunning data on its cystic fibrosis treatments. The stock march to its all-time high on the back of these results as it closed $159.69, $27.53 higher than previous close.
Hong Kong analyst views
- China Comm Cons (1800 HK): H Shares Raised to Buy at DBS Vickers.
- China Mer Port (144 HK): Raised to Outperform at Daiwa, price target $HK27.
- China Yongda (3669 HK): China Yongda New Buy at UBS, PT $HK10.10.
- Luk Fook (590 HK): Raised to Hold at HSBC, PT $HK29.
Hong Kong stocks
- Chipbond Declines to Comment on Report of BOE Group (200725 CH) Deal.
- China Oilfield Services (2883 HK) H1Net Loss of About 370m Yuan.
- China Unicom End-June Subscribers at 409.7 Mln.
- Cinda Real Estate (600657 CH) Plans 7.8b Yuan Huainan Real Estate Buy.
- GD Power (600795 CH) Jan.-June Power Generation Rises 3.36% on Year.
- Glencore (805 HK): South Africa Proposes Restrictions on Mining, Prospecting Rights.
- Huadian Power (600027 CH) Jan.-June Power Generation Rises 2.33% Y/y.
- Logan Property Buys 49% Jinjun Real Estate Stake for 2.09b Yuan.
- Luk Fook (590 HK) April-June Same-Store Sales Rise 5% on Year.
- Minmetals (600058 CH) Unaware Of National Cold Merger Plan, Unit says.
- MMG (1208 HK): Southern Copper, Antamina Peru Operations Unaffected by Strike.
- Muyuan Foodstuff (002714 CH) H1Net 1.2b Yuan vs 1.07b Yuan Year Ago.
- PetroChina (857 HK) Lubricant Unit Posts More Than 350M Yuan Profit in H1.
- Sanan Optoelectronics (600703 CH) Prelim. H1Net 1.51bn yuan.
- Standard Chartered (2888 HK) Hires Two For Syndicated Loans Team in Hong Kong.
- Naspers Lifts Johannesburg Stocks as Tencent Tencent (700 HK) Rallies to Record.
- Tencent (700 HK): China Orders Websites to Step Up Self-Censorship.
- ZTE (000063 CH) First Half Preliminary Net 2.29 bn yuan.
Japan analyst view
- New buys at Nomura: Anicom (8715), F-Tech (7212), Kanamoto (9678), Link And Motivation (2170), Nishio Rent All (9699), OSJB Holdings (5912), Shoei Foods (8079), UT Group (2146).
- Chugai Pharma (4519): Raised to neutral from underperform at Mizuho.
- Fuji Seal (7864): Rated new buy at Haitong.
- GMO Internet (9449): Cut to equalweight from overweight at Morgan Stanley MUFG.
- Life Corp. (8194): Cut to neutral from buy at Okasan Securities.
- Start Today (3092): Raised to overweight from equalweight at Morgan Stanley MUFG.
- TDK (6762): Raised to buy from neutral at UBS.
- Tokyo Seimitsu (7729): Rated new neutral at Okasan Securities.
- Bandai Namco (7832): To raise stake in Toei Animation (4816) to 11%.
- CRE (3458): Lifts full-year group operating profit forecast by 12% to ¥5bn.
- East Japan Railway (9020): To retire 0.96% of shares on July 25.
- Edia (3935): To conduct 2-for-1 stock split on September 1.
- Fuji Electric Industry (6654): First Eagle cuts stake to 6.5% from 7.6%.
- H2O Retailing (8242): Delivery fees and Hankyu Hanshin Dept. inspected by Japan FTC.
- Ichiyoshi Securities (8624): 1Q group operating profit forecast ¥1.1bn.
- J Front Retailing (3086): Daimaru probed on suspicion of antitrust law violation.
- Kose R E (3246): Lifts half-year group operating profit forecast by 49% to ¥1.4bn.
- Medical Ikkou (3353): Drops full-year group operating profit forecast by 8.9% to ¥1.5bn.
- Mitsubishi UFJ Financial Group (8306): Tokyo Stock Exchange to fine Morgan Stanley MUFG Securities ¥80mln and suspend securities trading for its proprietary account from July 31 to August 2.
- Ryohin Keikaku (7453): Templeton Investment and others raise stake to 6.4%.
- Takamatsu Construction Group (1762): To buy back up to 1.7% of shares out.
- Toshiba (6502): Cuts off Western Digital workers’ access to info after appeal.
- Yasunaga (7271): Lifts full-year group operating profit forecast by 62% to ¥1.2bn.
Australia analyst views
- ANZ Bank (ANZ): Raised to buy at Citi.
- Cimic (CIM): Cut to sell at Morningstar.
- BHP Billiton (BHP): New BHP chairman flags board changes, asset review to investors; Cut to neutral at Citi, PT $A25.50.
- National Australia Bank (NAB): Raised to neutral at Citi.
- NextDC (NXT): Cut to hold at Moelis & Company, PT $A4.85.
- Telstra (TLS): Raised to buy at Morningstar.
- Triton Minerals (TON): Initiated at Edison with no rating system.
- Westpac (WBC): Raised to overweight at Morgan Stanley, PT A$32.70; Raised to neutral at Citi.
- Australian Treasurer sees economy building momentum: Australian.
- Alumina (AWC): Alcoa Q2 adj. EPS beats ests.
- ALS (ALQ): Annual meeting scheduled; NOTE: Co. in May said planned to offer H1guidance at AGM.
- Ausnet (AST): Annual meeting expected; NOTE: Co. in May targeted A$1b contracted energy infrastructure assets by 2021.
- Commonwealth Bank (CBA): Is said to consider options for life insurance ops: AFR.
- CSL (CSL): FDA accepts CSL Behring supplemental BLA for Hizentra indication.
- Evolution (EVN): 4Q production report expected; NOTE: Co. in April forecast FY17 gold output 800k-860k oz.
- Fletcher (FBU): Cuts FY earnings target on buildings unit.
- Fortescue (FMG): Iron ore extends gains a third day, closes above $70, according to a price index compiled by Metals Bulletin.
- Graincorp (GNC): Australia wheat output seen down more than forecast: USDA FAS.
- Origin Energy (ORG), Oil Search (OSH): Citi cuts Origin, Oil Search on weaker LNG, oil.
- Perseus (PRU): Raised to overweight at Morgan Stanley, PT $A0.38
- Santos (STO): Q2 production report expected; NOTE: Co. in April affirmed 2017 output target 55-60 mln narrels of oil equivalents.
- South32 (S32): Q4 production report expected; NOTE: Co. in April forecast FY17 Cannington silver output 16.5mln oz.
- Sydney Airport (SYD): Scheduled to release June passenger data.
- Woodside (WPL): Q2 production report expected; NOTE: Co. in April forecast 2017 output 84-90mmboe.
- WorleyParsons (WOR), Beach Energy (BPT), Karoon (KAR): Oil climbs as U.S. crude and gasoline supplies keep shrinking
- Bank of New York Australia ADR Index +3.1%, most since March 15.
- BHP Billiton ADR +1% to $A25.03 equivalent, 0.8% premium to last Sydney close.
- Rio Tinto ADR -0.3% to $A57.05 equivalent, ~12% discount to last Sydney close.
- Companies trading above 20/50/200 day moving average, Bollinger upper band with RSI above 70: None among screened stocks.
- Companies trading below 20/50/200 DMAs, Bollinger lower band with RSI below 30: TLS, GTY, RSG.
– Edited by Robert Ryan
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