Morning Report APAC: China's upside growth surprise lifts sentiment
- China's upbeat GDP data showed deleveraging hasn't hurt growth
- The positive China data gave base metals a lift
- The ECB's Benoit Coeuré said Europe is expanding, not just recovering
- All eyes will be on European Central Bank meeting next week
- Brent continues to see resistance at $70/b, and $68.55/b is now key support
By Saxo APAC Sales Trading
Economic data of the day (Singapore Time)
- 2145: US – Atlanta Federal Reserve President Raphael Bostic speaks on US economy in Nashville
- 0200, Saturday: US – Fed’s Randal Quarles speaks on Bank Regulation
Overnight news, markets
- The US dollar is consolidating ahead of Friday’s government shutdown uncertainties, while the euro gained on ECB’s comments on economy. Treasuries were lower as sentiment is still weak on fixed income market.
- Equities are mixed with S&P dropped back to be below 2800 and Dax up by 0.7%.
- Base metals rose after China's economic data beat expectations.
- Oil pared losses on big withdraw on US inventories.
Overnight news, US
- Data were mixed with initial jobless claims fell to 220,000, lower than expectation and hit the lowest level since 1973. Housing starts in December fell sharply while building permits remained solid.
- There is still no progress in avoiding a government shutdown, as Republicans and Democrats are still playing a game of chicken, with both sides seemed standing firmly on their feet. However, the clock is ticking.
Overnight news, China
- China's GDP result surprised the market to the upside with Q4, 2017, growth at 6.8% and full year growth at 6.9%.
- Retail sales, industrial production and fixed assets investment are all solid. On the one hand, it gave a strong note that deleveraging up has not been dragging China's economy down; on the other hand, more deleveraging is expected to kick in in 2018.
- USD whipsawed as support from good jobless claim data is balanced by uncertainties on government shutdown.
- EUR gained back some ground as Benoit Coeuré, a member of the executive board of the European Central Bank, commented that European economy is expanding instead of just recovering. All eyes are on ECB meeting next week.
- Emerging Currencies: emerging currencies benefitted from the USD staying at a three-year low. CNY and CNH rose after growth in China in 2017 topped expectations. ZAR post its biggest gain since December 2017 after the central bank kept rates on hold.
Foreign exchange movements
- GBP vols rose as the spot continued to make new highs.
- AUD vols picked up, with interesting in buying call for 0.81 and above increases after AUDUSD passed the 0.80 handle.
- US yields were higher as market sentiment on fixed income remained weak. However, little directional move is expected before results on a votes in the Senate for the advance stopgap funding bill.
- Bunds yield gave back some of its gains after hitting key level of 2.6%. Peripherals outperformed, fuelled by overbidding across the Spanish issue.
- The Dow retreated 100 points from its open with Dow component General Electric traded to its lowest in 6 hears after breaking the $17 support level while Boeing and Goldman also added pressure with a 3% and 1% decline.
- Lithium miner Albermarie dropped as mhch as 7.1%% yesterday as SQM (another big lithium miner) could receive permission from Chile to boost its annual production of lithium. Possible higher productiom from SQM could erode the metal prices. SQM was flat as it traded 0.89% lower.
- GNC Holdings soared 51% on bullish outlook as the health supplement company grow 5.7% yoy. There is still plenty of work to be done for GNC as the stock had fallen more than 70% in 2017.
- Geberit traded 6.5% higher after the Swiss plumbing products maker reported annual sales data that were in line with analysts’ expectations. Geberit reclaimed the 200 day moving average after the share price dropped more than 10% in Q4. Geberit could see next resistance at 475.
- In Hong Kong, surges in Financials continued with ICBC bank trading 3.17% higher as it led the banking sector on Thursday. Notable performers also include Bank of China 2.32% , China Construction Bank (2.81%), Bank of Communications (2.04%).
– 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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