Morning Report APAC: Equities rally takes a breather as crude falls
- The ECB kept its powder dry and left the refinancing rate at 0%
- It said any fallout from Brexit would be countered by using all tools in its mandate
- Gold rebounded from a three-week low
- Oil is headed for a decline for the week after falling overnight
- Silver, platinum and palladium gained overnight
By Saxo APAC Sales Trading
Economic data of the day (Singapore Time; GMT +8 hours)
- European Central Bank: The ECB kept its powder dry and left the refinancing rate at 0%, the deposit rate at -0.4% and asset purchases at €80bn per month. The ECB reiterated that any economic fallout from Brexit would be countered by using all instruments in its mandate.
- US: The June existing home sales report was very strong, with the annualized rate of sales rising a bit more than 3% y/y to a nine-year high of 5.57 million. The market's biggest challenge is still supply: inventory was 5.8% lower y/y, the 13th consecutive month of declines.
EURUSD tried to move higher on the ECB outcome bet met resistance at 1.1060 and settled to its starting position of 1.1020. Talk of strong USD data was a factor in the rally fading.
Other net thematic interest has been shifted towards light USD selling against JPY, and AUD, with light USD buying against MXN.
GBPUSD showed limited reaction to the June retail sales and budget, as this was mostly pre-referendum information.
NZDUSD is still stuck at 0.7000 and while dialogue around the next Reserve Bank of New Zealand move has shifted from potentially 25 basis points to potentially 50 bps, our New York trader is worried about being short.
Foreign exchange volatilities
Treasuries rebounded following losses in both stocks and oil and as European sovereign bonds declined in the wake of the ECB meeting.
US government sold $13bn of 10-year TIPS at a yield of 0.045%, the lowest since May 2013. The bid-to-cover ratio rose to the highest level in 16 months. Primary dealers, who are obligated to bid at U.S. sales, received only 23.9% of the debt, reflecting robust demand.
The Dow Jones Industrial Average retreated 0.42%, ending a streak of all-time closing highs. The S&P 500 fell 0.36%, dragged down by losses in industrials (-1%), energy (-0.9%) and materials (-0.6%), while utilities (+0.6%) and healthcare (+0.4%) were the lone winners.
Shares in mining gear maker Joy Global Inc., soared 20% after Japanese construction machinery giant Komatsu Ltd. (+2.26%) said it has agreed to buy Joy for $2.89 billion, $28.30 per share in cash, a 20% premium to Wednesday’s close.
European stocks edged lower as ECB president Mario Draghi offered little hint of additional stimulus in the very near-term.
Airlines stocks plunged after Deutsche Lufthansa (-5.7%) and easyJet PLC (-5.3%) signalled that the recent terrorist attacks and political turmoil in Europe were weighing on their businesses.
- ICBC (1398 HK) raised to ’outperform’ at Credit Suisse.
- CM BANK (3968 HK) raised to ’outperform’ at Credit Suisse.
- Sun Art Retail Group (6808 HK): Rated new “sell” at Haitong International.
- Tingyi Cayman (322 HK): Downgraded to “sell” from “neutral” at Haitong International.
- Bankrate (RATE US): China unit suspends business from August 1.
- Bestway Intl (718 HK) to take control of Hua Lien.
- Citic Bank (601998 CH): CBRC approves Li Qingping as bank chairperson.
- China National Building Material (3323 HK): Issues profit warning.
- Citic Bank (998 HK): Gets CBRC approvals for chairperson, president.
- Citic Securities (600030 CH): H1 net 5.32bn yuan vs 12.5bn yuan year ago.
- Fosun (656 HK) bought Wolverhampton Wanderers for £30mln.
- ICBC (1398 HK): Gets CBRC approval for Wang Bairong as chief risk officer.
- Nirvana (1438 HK): Appoints Somerley to advise on proposed privatization.
- Shenhua (1088 HK) said to seek CGN merger to form $204 billion power giant.
- Sichuan Guodong Construction (600321 CH) in Sheffield, UK investment pact.
- Sihuan Pharma (460 HK) bought back 36.9m shares for HK$68.5m Thursday.
- Tencent (700 HK) disciplined over Xi Jinping headline error, SCMP says.
- Vanke (2202 HK), Jushenghua summoned by CSRC for talks over dispute.
- Want Want China (151 HK) bought back 10m shares for $HK50.7mln Thursday.
- IPhone cutback hurts Japanese component makers.
- GPIF plans socially responsible investment index.
- Nikon Q1 Operating Profit Seen Up More Than Double.
- Fujifilm to Bid for Takeda Research Reagents Unit.
- Watchdog eyes fines for foreign cartel members.
- Nippon Gas three-month operating profit Seen about ¥4.5bn.
- Mitsui OSK to Open Uruguay LNG Terminal in 2018.
- 1300 hours: Ricoh Leasing (8566 JP).
- 1500: Tokyo Steel Manufacturing (5423 JP)
- 1500: JAFCO (8595 JP).
- 1500: Nidec (6594 JP).
- 1500: Fujitsu General (6755 JP).
- GMO Internet (9449 JP): Raised to overweight at Morgan Stanley MUFG.
- Monotaro (3064 JP): Cut to equalweight at Morgan Stanley MUFG.
- Start Today (3092 JP): Cut to equalweight at Morgan Stanley.
- Yahoo Japan (4689 JP): Raised to overweight at Morgan Stanley.
- Zojirushi (7965 JP): Raised to outperform from neutral plus at Iwai Cosmo.
– 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