Morning Report APAC: Crude hits three-week high on Opec cut hopes
- 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)
- 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.
- 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.
- 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.
- 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.
- 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.
- 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.
- 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.
- 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.
– 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.
All material contained herein is provided for your general information. The information and commentaries are not intended to be and do not constitute financial advice, investment advice, trading advice or any other advice or recommendation of any sort offered or endorsed by Saxo Capital Markets Pte. Ltd. (“SCM SG”). Any expression of opinion (which may be subject to change without notice) is personal to the presenter and/or author; they do not reflect the view or opinion of SCM SG or its affiliates, neither do they constitute an endorsement of SCM SG’s view or analysis of the same.
None of the information contained here constitutes an offer to purchase or sell a financial instrument, or to make any investments. SCM SG does not take into account your personal investment objectives or financial situation and makes no representation and assumes no liability as to the accuracy or completeness of the information nor for any loss arising from any investment based on any commentaries or information provided here.
For further information, please click here.
Saxo Capital Markets Pte Ltd ("Saxo Capital Markets") is a licensed subsidiary of Saxo Bank A/S, an online trading and investment specialist. Saxo Capital Markets serves as the APAC headquarters and holds a capital markets services licence under the Monetary Authority of Singapore; and a commodity broker licence issued by the International Enterprise Singapore. Clients can trade Forex, CFDs, Stocks, Futures, Options and other derivatives via SaxoWebTrader and SaxoTrader, the leading multi-asset online trading platforms.
Trading risks are magnified by leverage - losses can exceed your deposits. Trade only after you have acknowledged and accepted the risks. You should carefully consider whether trading in leveraged products is appropriate for you based on your financial circumstances. Please consider our Risk Warning and General Business Terms before trading with us. Please see full General Disclaimer.
Thousands of serious traders receive free news and analysis from Saxo Capital Markets each day. Saxo Capital Markets never sends these emails unsolicited; they are sent following acceptance of your membership and subscription request by Saxo Capital Markets at saxomarkets.com.sg. If you do not wish to receive any emails from Saxo Capital Markets in the future, please reply to this email with the word "UNSUBSCRIBE" in the subject header.
Samsung Hub | 3 Church Street | # 30-01 | Singapore 049483
Company No. 200601141M