Morning Report APAC: Equities buoyant on Wall St lead
- Oil prices made minor gains due to tension in Iran, and a slowdown in US drilling
- Agricultural commodities are generally lower amid abundant global supplies
- Bitcoin fell amid regulatory concerns in South Korea and a Chinese crackdown
- Gold has potential for upside gains in 2018
By Saxo APAC Sales Trading
Economic data of the day (Singapore Time)
Speeches (Singapore Time)
- 2300: US – Fed’s Neel Kashkari speaks on Moderated Panel.
Overnight news, Korea
- The South Korea and North Korea are having their first high level talks in two years in Panmunjom, to discuss the North joining the next winter Olympics and possibly start to renegotiate Pyongyang's nuclear program.
Overnight news, Bitcoin
- Bitcoin fell 17% amid regulatory concerns in South Korea and a Chinese crackdown on power use by currency miners. The Securities and Exchange Commission also applied more scrutiny to firms claiming a crypto connection. It suspended trading in Hong Kong-based UBI Blockchain Internet, which jumped more than 900% last year, due to "unusual and unexplained market activity." (Bloomberg)
Overnight news, China
- China’s regulators are targeting the estimated 1 trillion yuan online cash micro-lending industry that has drawn criticism for exorbitant interest rates and underhand lending practices.
- Chinese billionaire Jack Ma’s Ant Financial issued a record 238 billion yuan ($37 billion) in 2017 of asset-backed securities (ABS) backed by consumer loans. It allowed them to remove these loans from its balance sheet but authorities announced on December 1 they were requiring micro lenders to consolidate ABS into their balance sheets.
- FX Reserves: news came on Sunday that Reserves increased $20.7 billion to $3.14 trillion in December. China’s foreign-currency holdings rose $129bn in 2017, posting the first annual gain since 2014 amid tighter capital controls, a stronger yuan and resilient economic growth.
- We saw some profit taking in short USD positions overnight, with no major news in the market.
- EURUSD was the main mover lower with the market heavily positioned on long euro/crosses. With the one month vol below 6. It is worth looking at EUR put around that maturity for a quick selloff.
- Emerging Markets: South Korean authorities are starting erbal interventions on KRW, warning about the strong won. The USDKRW saw a small retracement move higher.
Foreign exchange movements
- We are seeing low delta buyers of USDJPY in ¥114.0/¥114.5 strikes for two weeks, in very good sizes.
- The USDCNH vol curve is under pressure with good selling interest in the front end.
- US yields were hardly changed amid light schedule of data releases and a quiet trading day.
- European yields were lower with buying into risk of the Catalonian political situation, and peripherals outperformed.
- GoPro plunged 12.77% on close today as the company announced a disastrous preliminary fourth-quarter numbers on Monday. Revenue is expected to be at around $370 million which is. 37% declined year on year. GoPro was down more than 20% yesterday at one point until news broke out that it has hired JPMorgan to explore a possible sale.
- Seagate soared on news that it was one of the early investors on Ripple, a type of cryptocurrency which has recently soared in value and challenging long standing Ethereum in the number 2 spot (in market value). However, the news were sold into as the stock retreated almost $4 from its intraday high before closing only $3.06 higher.
- In Europe, shares in the UK retailer Mothercare fell 27.5% after the retailer issued a profit warning and fell to its all-time low. Mothercare is now predicting a pre-tax profit of £1m to £5mln for its financial year to the end of March. Mothercare closed at 44.95 pence.
- Pharmaceutical company Galapagos NV rose 4.53% as on positive tests from its positive preliminary results in an osteoarthritis study.
Hong Kong equities
- In Hong Kong, Value Partners (0806.HK) rose 5.2% after issuing a positive profit alert, expecting the net profit to increase significantly to about HK$2 billion for the year ended December 31, 2017 as compared to $HK137.5 million in the previous year. Next resistance for asset management company would be at $HK9.06, its high in 2017.
– 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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