Sterling has been blasted lower after BoE governor Carney cast doubt on a previously pretty-much-expected UK May rate hike. The EU's rejection of Britain's latest Brexit-Irish border plan only served to deepen the rot.
Article / 28 September 2016 at 2:11 GMT

Morning Report APAC: Clinton 'relief rally' points Asia stocks higher

APAC Sales Trading Desk / Saxo Capital Markets


  • Oil trading near $45/b before major producers discuss output in Algiers
  • MSCI Asia Pacific Index up 0.1% in early trading, but Nikkei down 1.1%
  • Shares on Japan’s Topix trade ex-dividend Wednesday
  • US consumer confidence hits its highest level in nine years
  • USDMXN was the best performer after the Clinton–Trump debate

By Saxo APAC Sales Trading

Economic data of the day (Singapore Time)



- 1605 – GBP – BoE’s Shafik speaks at Bloomberg’s most influential conference
- 1700 – EUR – ECB president Mario Draghi addresses research conference in London
- 2200 – USD – Fed chair Janet Yellen testifies before house panel on bank supervision

Overnight news

Oil:  Iran rejected the offer to freeze the current output at 3.6 million barrels per day at the Opec meeting in Algiers and insisted to ramp up the production to 4.1-4.2m barrels per day.

Saudi Arabia signaled it may accept Iran’s position, opening the door for a November pact.
US: Consumer Confidence hits its highest level in nine years at 104.1 (expected 99.0). The confidence comes from a more positive view of the labour market.
US: Markit US Services PMI rose to 51.9 (expected 51.2), the fastest monthly rise since April.
Argentina: The central bank left the benchmark rate at 26.75%. Indicators continue to show inflation is slowing toward the central bank’s expectations in coming months, the Argentine central bank says in e-mailed statement.

Despite a clear slowdown in inflation in recent months, the central bank's August survey showed expectations for 2017 CPI are above target of 12% to 17% .

Foreign exchange


It was a very quiet session overnight despite the small selloff in EURUSD following the European Banking sector worries but the pair is still within the same range.

GBPUSD started the day really offered but didn’t manage to close below 1.3000 which remains the strong support.

A false break in USDCAD, which failed to close above the 200 Day Moving Average at 1.3235 and is back to the range. Only a confirmed break above the 200 DMA would trigger strong buying interest.

In emerging markets, USDMXN was the best performer after the Clinton–Trump debate and dropped 2.8% on the hope that Clinton had taken an advantage in the US elections.

Very offered tone in USD in Asia with USDKRW down more than 1% on exporters' month end flows and pick up in the tax amnesty in Indonesia pushing the pair lower and breaking the 13000 level in spot.

USDCNH curve remained well offered with T/N trading at -2 and locals selling the 1 year forward.

Foreign exchange movements
Funds are buying short-dated USDJPY downside (around 2 weeks date). USDMXN volatilities sold off after the strong move lower yesterday. The 1M ATM dropped 2 Vols from 19.14 to 17.37.

Rates and credit
Rates: Oil prices have fallen on the back of there being an unlikely deal in Algeria and the growing concerns and negativity on European banks strengthen demand on government bonds as German 30-year bunds yielded 0.42% on Tuesday.

US 10-year Treasuries closed 2.6 basis points  to 1.558% while the US 2-year had subdued gains and closed 0.1bps higher to 0.746%.
Credit: The pressure that Deutsche Bank is facing has triggered some delays in corporate bonds selling.  NordLB, one of Germany’s five remaining big Landesbanken, postponed the sale of a seven-year senior unsecured bond.

NordLB, which is under pressure given its exposure to the shipping market, told investors that “due to current market conditions” it had decided not to go ahead with the sale of the bond but added that it would “re-engage” with investors in future.

The cancellation followed Lufthansa, the German airline, pulling a bond sale on Monday, also citing market conditions. (Source: Financial Times).




US stocks regained ground after first presidential debate which seemed to give the market a 'Clinton relief rally’, countering weakness in energy sector dragged by oil price slump.

The S&P 500 bounced 0.6% to 2,159.93 with tech sector (+1.2%) leading the rise. Nike was up 1.7% in anticipation of better first quarter earnings per share. After market it reported first quarter earnings per share of $0.73 higher than the markets estimate: $0.56, on revenue of $9.06 billion .

European stocks close narrowly higher as Deutsche Bank rebounded amid hope of lower claim from the US Justice Department, however energy stocks weighted in the market.

The STOXX 600 index inched up 0.19 to 340.19 while the oil index lost 1.4%. In London the FTSE 100 edged down 0.15% to 6,807.67, with British retail sales fell unexpectedly in September.

Deutsche Bank erased morning losses and closed up by 0.6%, after the US Justice Department's third highest-ranking official said banks can lower penalties by co-operating with authorities.

Volkswagen slid 2.6% on reports that Germany was vetting a criminal fine that would bankrupt the firm.

Postal Savings Bank debuts in Hong Kong, with gray market trading signalling the stock could drop after the year's biggest IPO.

China's fifth-biggest lender raised $7.4 billion selling shares at HK$4.76 each, giving it a higher price-to-book ratio than other state-owned peers.

Asia Pacific Stocks

Hong Kong
Analyst ratings

- China Eastern (670 HK): Cut to hold at BNP Paribas
- China Life (2628 HK): Raised to hold at HSBC
- China Southern (1055 HK): Raised to buy at BNP Paribas
- Glencore (805 HK): Cut to hold from buy at Canaccord
- Guangdong No. 2 Hydro (002060 CH): Rated new buy at Everbright
- Jilin Power (000875 CH): Rated new outperform at SWS Research
- Lonkey Industrial (000523 CH): Rated new buy at Everbright
- Lushang Property (600223 CH): Rated new accumulate at Everbright
- Minth Group (425 HK): Cut to hold from buy at DBS Vickers
- Nexteer Automotive (1316 HK): Cut to hold from buy at DBS Vickers
- Shanghai Yatong (600692 CH): Rated new buy at Everbright
- Wuliangye (000858 CH): Rated new buy at Haitong


- Airports: China to encourage private investment in civilian airports: CAAC
- Coal: China said to hold meeting to secure winter coal supply
- Developers: Hangzhou to raise down payment requirement for second homes; H.K. property market outlook becomes more uncertain: HKMA
- Electric cars: China may release NEV subsidy rules in Oct.
- Rail: China Aug. railway cargo volume rises 0.1%
- Baoshan Steel (600019 CH), Wuhan Steel (600005 CH): Baosteel gets Shanghai exchange - inquiry on Wuhan Steel merger
- Hangzhou Liaison (002280 CH): Plans to buy 56% of Newegg for $264.2m
- HSBC (5 HK): Bought back 3.27m shrs at avg 575.20 pence each Sept. 27
- ICBC (1398 HK): Appoints Gu Shu as president
- Shandong Gold (600547 CH): Said to be top bidder for $2b Glencore mine
- Sinosteel Tech (000928 CH): Parent debt restructuring plan approved
- Tsui Wah (1314 HK): Chairman raises stake in controlling holder Cui Fa

Analyst ratings

- Canon (7751 JP): Cut to sell at Haitong
- Coca-Cola East Japan (2580 JP): Raised to outperform at SMBC Nikko Securities
- CyberAgent (4751 JP): Raised to overweight at JPMorgan
- Mitsubishi Corp. (8058 JP): Raised to buy at Goldman


- Arcland Sakamoto (9842 JP): 1H oper. profit 4.78b yen vs co. target 4.68b yen
- DCM Holdings (3050 JP): 1H oper. profit 12.9b yen vs co. forecast 12.1b yen
- Dip (2379 JP): Prelim. 1H parent oper. profit 4.3b yen vs co. forecast 3.32b yen; boosts planned interim dividend to 16 yen/share from 12 yen
- Electric Power Development (9513 JP): Raises full-year parent net income forecast 96% to 51b yen
- Honeys (2792 JP): 1Q oper. profit -4.5% to 420m yen
- Nitori Holdings (9843 JP): 2Q oper. profit 21.9b yen vs analyst est. 19.6b yen
- Sugi Holdings (7649 JP): 1H oper. profit 11.7b yen vs co. target 12.2b yen
- Suzuken (9987 JP), EPS (4282 JP): Forming alliance, capital tie-up, exchanging ~2b yen each in treasury shares
- Toho (9602 JP): Prelim. 1H oper. profit 24.4b yen vs co. forecast 16.8b yen; cites Godzilla, - Doraemon movies for beat
- Toyo Kohan (5453 JP): Cuts 1H oper. profit forecast 88% to 100m yen



- ASX (ASX AU) annual meeting
- AGL Energy (AGL AU) annual meeting
- Z Energy (ZEL NZ) considering an offer of up to NZ$350m in 5-yr, 7-yr bonds
- OceanaGold (OGC AU) seeking clarification after being names in Philippines audit

Information sources: CIMB / Bloomberg

 On top of her brief: Hillary Clinton's performance has assured markets. Photo: iStock

– Edited by Adam Courtenay

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