Article / 27 January 2017 at 2:23 GMT

Morning Report APAC: Crude hits three-week high on Opec cut hopes

APAC Sales Trading Desk / Saxo Capital Markets
Singapore
  • The Dow Jones extended its rally logging new records
  • But gains in industrials and consumer-discretionary shares were offset elsewhere
  • Crude prices rose on hopes of Opec output cuts
  • Wheat rose as exports soared to a three-year high

 By Saxo APAC Sales Trading

Economic data of the day (Singapore Time; GMT plus 8 hours)
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 Speeches
  • No Federal Reserve speakers on tap, as the Fed is in itsblackout period ahead of its January 31 - February 1 policy-setting meeting

Overnight news from the US

  • In the latest economic data, the number of Americans who applied for unemployment benefits climbed by 22,000 to a one-month high of 259,000 in late January, but the level of layoffs remained extremely low.
  • President Enrique Peña Nieto of Mexico has cancelled a summit scheduled for next week with President Trump period after the US president signed a directive Wednesday to initiate the process of building the border wall.
  • The Trump administration floated a 20% tax on imports from Mexico to pay for a wall along its border with the US.

 



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  • The US dollar’s weekly slide found some support from strong bidding as some saw need for dollar to re-establish connection with US Treasuries yields
  • An initial surge in the NZDUSD on the positive inflation data met technical resistance from the September to November 2016 trendline, which may cap gains over the NZDUSD and a retest of this trendline should not be ruled out.

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  • US Treasuries yields abruptly turned lower after Mexican President Nieto cancelled a scheduled meeting with President Trump and following a strong 7Y auction.
  • Italy 10 year reached the highest since July 2015 and France 10 year yield topped 1% as pressured by political risks and supply schedule.

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Equities

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  • The Dow Jones extended its rally logging new records, but the overall market was relatively subdued as gains in industrials and consumer-discretionary shares were offset by losses in health-care and consumer-staples.
  • Among companies that reported earnings, Mattel Inc. tanked 18% after disappointing quarterly results late Wednesday, eBay Inc. jumped 5% after the reported solid earnings from its holiday quarter, Dow Chemical gained 2% after posting adjusted earnings well ahead of forecasts and Diageo PLC climbed 3.2% after the maker of Johnnie Walker whiskey and Smirnoff vodka said half-year profit rose to £1.51 billion ($1.9 bn).
  • Charter Communications Inc. charged 7.4% higher on news that Verizon Communications Inc. (+0.02%) is exploring acquiring the cable company to help build its media and content businesses as the competitive environment in the industry intensifies.
  • Alphabet’s Class A shares declined 2.5% to $836 in after-hours trading after reporting an 8.3% increase in Q4 profit, largely driven by the sustained shift to mobile, but fell short of analysts’ expectations on a higher-than-expected tax adjustment.
  • Stoxx Europe 600 index rose rising for a third straight day reaching the highest close for the benchmark since December 30, 2015.
  • Actelion leapt 19% after Johnson & Johnson (+0.14%) said it’s buying the Swiss biotech firm for $30 billion, giving J&J access to Actelion’s range of rare-disease treatments.
  • Unilever dropped 4.7% as the owner of Dove soap, Ben & Jerry’s ice cream and other consumer products said difficult market conditions are likely to persist in the first half of 2017.

Asia-Pacific equities

Hong Kong stocks
  • Chalco (2600 HK): Sold holdings in Jiaozuo Wanfang Aluminum.
  • China Motor Bus (26 HK): Refutes Argyle allegations.
  • Fullshare (607 HK): Sees 2016 profit rising to about 3bn yuan.
  • Kunlun Energy (135 HK): To Register up to 10bn yuan notes.
  • Leshi Internet (300104 CH): Sees 2016 net rising 10%-35%
  • Power Assets (6 HK): Declares $HK5 special interim dividend.
  • Real Nutri (2010 HK): Review found no material discrepancies.
  • Sands China (1928 HK): Salary increase of 2%-6% on average.
  • Yingde Gases (2168 HK): Sets EGM to vote on director removals.
Japan analyst views
  • Fanuc (6954): Raises full-year operating profit forecast 4.3% to ¥140.5bn; Q3 OP ¥33.3bn yen vs analyst est. ¥35.4bn; 3Q orders ¥135.6bn vs ¥128.2bn in Q2; raised to overweight from neutral at JPMorgan.
  • Consumer stocks initiated at Jefferies: Buys: Pigeon (7956), Pola Orbis (4927), Kose (4922), Mandom (4917), Shiseido (4911); Holds: Unicharm (8113), Kobayashi Pharmaceutical (4967), Lion (4912), Rohto Pharmaceutical (4527), Kao (4452); Underperform: Fancl (4921).
  • Mitsubishi Gas Chemical (4182): Downgraded to underperform from neutral at SMBC Nikko Securities, PT ¥1,780.
  • Trend Micro (4704): Raised to neutral from underperform at Mizuho.
Japan stocks
  • Advantest (6857): Raises full-year net income target 8.3% to ¥13bn vs analyst estimate for ¥11.7bn.
  • AD Works (3250): 9-month net profit +39% y/y at ¥416mln.
  • Aomori Bank (8342): 9-month net income down 21% y/y at ¥4.382bn.
  • CyberAgent (4751): Operating profit for three months ended Dec. slides 51% y/y to ¥6.354bn.
  • Fuji Electric (6504): 9-month net profit down 40% y/y at 4.92b yen; operating profit slips 6.7% y/y to ¥10.716bn.
  • Daiwa Securities (8601): Names Seiji Nakata as president, Takashi Hibino to become chairman, Nikkei reports.
  • Hitachi Chemical (4217): Raised to neutral plus from neutral at Iwai Cosmo Securities, PT 3,500 yen
  • Hitachi Kokusai Electric (6756): To book unspecified charge for job cuts this fiscal year
  • Hitachi Metals (5486): 9-month net income down 35% y/y at ¥36.193b.
  • H2O Retailing (8242): 9-month operating profit slips 7.1% y/y to ¥17.135bn.
  • Kagome (2811): Prelim. full-year operating profit for 2016 at 10.9b yen, beating co. forecast for ¥9.2bn.
  • Kansai Paint (4613): To buy Uganda’s Sadolin for ¥10bn, Nikkei reports
  • Koito (7276): Lifts full-year operating profit forecast 8.5% to ¥89bn.
  • Metaps (6172): To raise 5.02b yen via sale of equity warrants to Credit Suisse
  • Mitsubishi Steel Manufacturing (5632): 9-month operating profit down 24% y/y at ¥2.413bn.
  • Mitsui Engineering & Shipbuilding (7003): Plans to buy stake in Kaji Technology (6391), turning it into a unit.
  • M3 (2413): 9-month operating profit +24% y/y at ¥18.656bn.
  • Nidec (6594): Ends share buyback program without making any purchases.
  • Nippon Gas (8174): 9-month operating profit ¥6.8bn, Nikkei says.
  • Orix (8591): Posts 12.2% 9-month ROE, exceeding its 11%-12% target.
  • Shin-Etsu Polymer (7970): 9-month operating profit jumps 55% y/y to ¥4.515bn.
  • SMC (6273): Raised to outperform from neutral plus at Mito Securities, PT ¥37,000.
  • Square Enix (9684): To develop games based on Marvel superheroes, starting with The Avengers.
  • Sumco (3436): Full-year operating profit 14b yen, Nikkei says; co. forecast ¥12.5bn, Bloomberg est. ¥13.1bn.
  • Sumitomo Chemical (4005): Trinseo to sell all of its 50% share in Sumika Styron Polycarbonate joint venture with co.
  • Sumitomo Mitsui Financial (8316): Expanding sales of overseas loans to Japanese regional banks.
  • Takagi Securities (8625): 9-month operating loss widens to ¥1.909bn from ¥904mln a year ago.
  • Teijin (3401): Rated new neutral at SMBC Nikko Securities, PT ¥2,340.
  • Yume No Machi Souzou Iinkai (2484): To conduct a 4-for-1 stock split on March 1.

Australia analyst views

  • Air New Zealand (AIZ): Cut to neutral vs outperform: MacquarieAlumina (AWC AU): Cut to sell vs hold at Deutsche Bank.
  • Evolution Mining (EVN): Cut to hold at Canaccord Genuity.
  • Northern Star (NST AU): Cut to neutral at Macquarie.
  • Whitehaven Coal (WHC): Rated new sell at Goldman, PT $A2.
  • Woolworths (WOW): Raised to overweight vs underweight at JPMorgan.

Australia stocks

  • Cimic (CIM): Terminates contract to build plant for Ichthys.
  • Computershare (CPU AU), Link Administration (LNK AU): Hastings, Link said shortlisted for Australian land registry.
  • Crown Resorts (CWN AU): China extends Crown Resorts probe as staff held for longer
  • Dakota (DKO AU): To invest $200mln-$400mln to mine in Portugal, Jornal reports.
  • Macquarie Group (MQG AU): Says no plans to strip assets of UK Green Bank
  • Perseus Mining (PRU): Q2 production report scheduled; NOTE: Co. in December forecast Edikan 1H output 70,000-80,000 oz gold.
  • Qantas (QAN AU): To expand intl unit after Joyce’s turnaround.
  • QBE Insurance (QBE): Said to be on watchlist of potential offshore acquirers: AFR.
  • Rio Tinto (RIO): Seen returning cash to holders after $2.45nb coal deal.
  • Slater & Gordon (SGH): Varde Partners buys debt in co.: Australian.
  • Technology One (TNE): Says any additional costs suggested by Brisbane city council in IT system replacement project not attributable to co.
  • Woodside Petroleum (WPL), Worleyparsons (WOR), Oil Search (OSH), Beach Energy (BPT), Karoon (KAR), Santos (STO), Origin Energy (ORG): Oil jumps to three-week high as market focuses on Opec cuts.
  • Bank of New York Australia ADR Index -0.9%.
  • BHP Billiton ADR -1.4% to $A27.22 equivalent, ~2% discount to last Sydney close.
  • Rio Tinto ADR -2.5% to $A59.38 equivalent, ~12% discount to last Sydney close.

 

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Crude prices have made gains on renewed hopes of Opec output cuts. Photo: iStock

 

– Edited by Robert Ryan


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