Article / 24 November 2017 at 1:44 GMT

Morning Report APAC: China stocks volatile, oil and base metals rally

APAC Sales Trading Desk / Saxo Capital Markets
Singapore

 

  • Base metals gained ground; copper led the gain on supply disruptions
  • Precious metals edged lower amid low liquidity over Thanksgiving holiday in US
  • The market is still digesting the FOMC minutes and its dovish outlook on hikes
  • The Shanghai Composite and the Hang Seng both retreated on Thursday
  • The falls came amid concerns about tighter regulatory moves in China

By Saxo APAC Sales Trading

Economic data of the day (Singapore Time; GMT+8hrs)
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Speeches

  • 1830 – EU: Danièle Nouy, chair, supervisory board of the single supervisory mechanism at the European Central Bank, speaks at conference in Frankfurt
  • 2030 – EU: ECB vice president Constancio speaks in Madrid
  • 0215 – EU: Benoit Coeuré, member, ECB executive board, speaks in Paris

Overnight news

  • Very strong PMI data was released in Europe. The composite PMI hit a 6 1/2-year high this month, French business confidence reached the highest in almost a decade and German manufacturing had its best reading since early 2011.
  • US markets were closed for the Thanksgiving holiday.

 

Foreign exchange

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  • EURUSD: Strong bidding interest on an overall quiet Thanksgiving market following the PMI numbers in Europe. There is now an inverted head and shoulders at 1.1865 that could push the euro above 1.2100; but we had plenty of false break since July.
  • Emerging Markets: USDEM collapsed literally last week on a broad USD selling. USDKRW broke the year lows and the psychological level of 1100, most probably on stops.
  • GDP in Singapore was better than expected at 5.2% (Exp. 5.0%) from 4.6% YoY pushing USDSGD close to the year lows at 1.3400.
Foreign exchange volatilities

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  • Vols in USDZAR exploded higher with S&P and Moody’s doing their reviews on ratings. If Moody’s goes below Investment grade, then we should see massive outflows from South Africa. The break-event for
  • G10 vols are overall offered and the focus has been on emerging markets
  • USDCNH vols are picking up due to the market caught short vol below 6.600 in spot. USDTRY vols are bid following spot

Rates

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  • The US rates market was closed for Thanksgiving.
  • European yields were generally higher after the release of solid PMI data; peripherals underperformed as ECB stays dovish and unwilling to provide a QE end date.
 Commodities
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US equities

  • Closed for Thanksgiving Holiday.
European equities
  • Centrica plummeted 15.5% after the British utility company lost 823,000 or about 6% of its energy customers in just four months and full-year earnings missed market estimates, and the company warned that its energy supply businesses have had a disappointing second half.
  • Altice NV, which has lost more than 50% in value November, reversed 3.9% following a Financial Times report that the French telecommunications company is seeking to sell its telecom network in the Dominican Republic.
Hong Kong equities
  • The Hang Seng index dropped 1% a day after crossing its 30,000 to decade-high, following a selloff in both bonds and equities in mainland China amid concerns about regulatory moves in China to tighten up financial conditions. Among Blue Chips, Ping An Insurance Group Co. of China Ltd. was down 3.8%.         
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 WTI extended its rally above $58/b, amid optimism about Opec extending its production curbs agreement when it meets in Vienna next week. Photo: Shutterstock

 

– 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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