Article / 25 August 2017 at 1:26 GMT

Morning Report APAC: Equities, USD 'waiting it out'

APAC Sales Trading Desk / Saxo Capital Markets
Singapore

 

  • Caution rules Asian markets as investors seek Jackson Hole clues
  • USD holding gains against most peers in early trading
  • West Texas Intermediate added 0.6% overnight to $47.73/b
  • Fed's Kaplan says market needs to be patient over rates

By Saxo APAC Sales Trading


Economic data of the day (Singapore Time)
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Speeches

2200: US – Janet Yellen speaks at Fed conference in Jackson Hole, Wyoming
0300: EU – ECB president Mario Draghi speaks in Jackson Hole


Overnight news

United States:  The Federal Reserve's Dallas president Robert Kaplan repeated his consistent theme that the Fed can afford to be patient and need not raise rates.

Kansas City Fed president Esther George, known for her hawkish views, continues to think the Fed can hike again this year as the economy is on firm footing and inflation misses are transitory. Supports balance sheet reduction.

Trump via Twitter blamed Republican leaders for the “mess” that is congress and the issues over the debt ceiling. He was also scathing of Mitch McConnell. The two are rumoured not to have spoken for weeks. 

Hurricane Harvey upgraded to a category 3 storm the largest to hit the Gulf of Mexico in a decade with oil platforms shut.
 
Europe:
UK GDP: In line with expectations at 1.7% year on year. UK exports missed expectations at 0.7% while imports beat.

Norway GDP surprised with a  big beat at 1.1% versus 0.6% expected. NOK rallied.

Sweden's unemployment rate was much higher than expected at 7.1% versus 6.5% expected. The market however did not react.


Foreign exchange

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USD: quiet day with mixed performance. Tentative signs that the USD is basing, certainly against the JPY were evident. As support around the 109 figure held.

NOK: again the best performing currency in the G10 space buoyed by strong GDP numbers. EURNOK is testing the key support level of 9.25, the July lows.

Emerging Markets: The HUF was the worst performing emerging market currency as the National Bank of Hungary floated the idea of further unconventional easing to temper the strength in the forint. 

Foreign exchange movements

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The bias to buy USDJPY downside continues despite the spot rally. Meanwhile Jackson Hole risk premium has eased moderately. CNH back end volatility buying has also eased, with the interest weighing. Very quiet in the volatility space before Jackson Hole.


Rates

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US Treasury yields rose by 2-3 basis points across the curve after Treasuries began cheapening over afternoon session, as oil pared losses and equities stabilised. Early sell-off driven by Axios report, which put shutdown odds as high as 75%.


Commodities

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Equities

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US stocks ended moderately lower as markets traded cautiously on low volume and focused on a symposium of central bankers in Jackson Hole, Wyoming.

Tiffany fell 1.33% despite reporting earnings of 92cps for the second quarter, 6cps above estimates. Revenue also beat forecasts, but comparable-store sales fell 1% compared to forecasts for a 0.2% drop.

Abercrombie & Fitch jumped 17.1% as reported an adjusted loss 16cps for its latest quarter, less than half the 33cps consensus estimate.

Revenue beat forecasts, and comparable-store sales fell a less-than-expected 1%, and expecting the retail apparel market to remain "challenging" and "promotional" during the remainder of the year.

Carrefour fell 2.1% as Deutsche Bank, referring to data from Kantar, said in a research note the French retailer experienced “another weak period” as its market share declined between July 10 through August 6.

Provident Financial rebounded 13% to be the best performer on the FTSE as bargain hunters moved in to buy stock after it lost two thirds of its value this week.

Asia-Pacific stocks


Hong Kong
 
Analyst ratings
 
-          Bank of Chongqing (1963 HK): Bank of Chongqing H Shares New Sell at Capital Securities Corp
-          China Jinmao (817 HK): China Jinmao Upgraded to Buy at Goldman; PT Raised to HK$4.10
-          China State Cons Int’l (3311 HK): China State Cons Int’l Raised to Buy at DBS Vickers; PT HK$13.60
-          China Taiping (966 HK): China Taiping Cut to Outperform at Daiwa; PT Raised to HK$27.50
-          China Vanke (2202 HK): China Vanke First Half Net Income Beats Estimates
-          CIMC Enric (3899 HK): CIMC Enric Downgraded to Hold at HSBC; Price Target HK$5.80
-          Cnooc (883 HK): Cnooc Upgraded to Buy at BNP; PT Raised to HK$10.70
-          Dah Sing Banking (2356 HK): Dah Sing Banking Raised to Buy at HSBC, PT HK$20
-          Great Eagle (41 HK): Great Eagle Says 1H Core Profit Rises 15% to HK$904.1m
-          Guangzhou Auto (2238 HK): Guangzhou Auto A Shares Raised to Neutral at JPMorgan
-          ICBC (601398 CH): ICBC A Shares Maintained at Strong Buy at Ping An (Correct)
-          Kingsoft (3888 HK): Kingsoft Cut to Neutral at KGI Securities; PT Cut to HK$23.60
-          Li & Fung (494 HK): Li & Fung Upgraded to Buy at Daiwa; Price Target HK$3.52
-          Li & Fung (494 HK): Li & Fung Upgraded to Buy at HSBC; PT Raised to HK$3.60
-          Sino-Ocean Group (3377 HK): Sino-Ocean Group Raised to Overweight at JPMorgan, PT HK$6.10
-          Sino-Ocean Group (3377 HK): Sino-Ocean Group Raised to Overweight at Morgan Stanley
 
Preview

-          Bank of Nanjing (601009 CH): Bank of Nanjing 1H Net 5.1b Yuan vs 4.36b Yuan Year Ago
-          Baoshan Steel (600019 CH): Baoshan Steel First Half Net Income 6.17 Bln Yuan
-          Baoshan Steel (600019 CH): China’s Top Steelmaker Says 1H Profit Rose 65%
-          BoCom (3328 HK): Bocom Margin Compression Halted as Bank’s Profit Beats Estimates
-          China CYTS Tours Holding (600138 CH): China CYTS Tours 1H Net 346.9m Yuan vs 318.2m Yuan Year Ago
-          China Jinmao (817 HK): China Jinmao $200m Tap of USD 4% Perp
-          China Life (2628 HK): China Life’s New Business Value Jumps on Insurance Sales
-          China Life (2628 HK): China Life, Baidu to Set Up 7B Yuan Fund to Invest in Internet
-          China National Nuclear (601985 CH): China National Nuclear First Half Net Income 2.55 Bln Yuan
-          China National Nuclear (601985 CH): China National Nuclear Plans to Sell up to 7.8B Yuan of Bonds
-          China Power (2380 HK): China Power First Half Net Income 425.1 Mln Yuan
-          Chinese Universe Publishing (600373 CH): Chinese Universe 1H Net 794.7m Yuan vs 634.4m Yuan Year Ago
-          Citic Securities (6030 HK): JD.com, Citic Sec. to Invest in China National Gold Unit: Xinhua
-          Citic Bank (998 HK): Citic Bank First Half Net Income 24 Bln Yuan
-          Cnooc (883 HK): Cnooc Swings to Profit on Higher Oil Amid Cost-Cut Drive
-          Dr Peng Telecom (600804 CH): Dr. Peng 1H Net 390.5m Yuan vs 404.1m Yuan Year Ago
-          ENN Energy (2688 HK): ENN Energy Profit Rises 3.9% as China’s Gas Demand Accelerates
-          Fosun Int’l (656 HK): Fosun International EUR Loan on Offer in Secondary Market
-          Founder Securities (601901 CH): Founder Securities 1H Net 824.2m Yuan vs 2.15b Yuan Year Ago
-          Great Eagle (41 HK): Great Eagle 1H Core Profit Rises 15% Y/Y
-          Guangshen Railway (601333 CH): Guangshen Railway 1H Net 508.7m Yuan vs 681.8m Yuan Year Ago
-          HSBC (5 HK): HSBC Bought Back 1.91m Shares at Avg 743.91 Pence Each Aug. 24
-          Huayu Auto (600741 CH): Huayu Automotive 1H Net 3.23b Yuan vs 3.06b Yuan Year Ago
-          Inner Mongolia Junzheng Energy & Chem Industry Group (601216 CH): Junzheng Energy 1H Net 924.3m Yuan vs 628.8m Yuan Year Ago
-          Li & Fung (494 HK): Li & Fung First Half Net Income $101 Mln
-          Luxshare Precision Industry (002475 CH): Luxshare Precision 1H Net 681.9m Yuan vs 401m Yuan Year Ago
-          CASINOS: Macau August Gaming Revenue Cut at Bernstein After Typhoon Hato
-          Meitu (1357 HK): Meitu First Half Loss 131.8 Mln Yuan
-          Merchants Securities (600999 CH): Merchants Securities First Half Net Income 2.55 Bln Yuan
-          PetroChina (857 HK): PetroChina First Half Net Income Beats Estimates
-          PetroChina (857 HK): PetroChina Says Interim Dividend Payout Ratio Is 100%
-          PetroChina (857 HK): Raizen Is Said Close to Shell’s Argentine Gas Station Buy: Rtrs
-          Qinghai Salt Lake Industry (000792 CH): Qinghai Salt Lake Prelim. 1H Net Loss 522.5m Yuan
-          Shanxi Lu’an Environmental (601699 CH): Shanxi Lu’an 1H Net 1.14b Yuan vs 51.5m Yuan Year Ago
-          Shenzhen Inovance (300124 CH): Shenzhen Inovance 1H Net 428.7m Yuan vs 388.6m Yuan Year Ago
-          Shenzhen Salubris Pharma (002294 CH): Salubris Pharma 1H Net 730.4m Yuan vs 694.3m Yuan Year Ago
-          Sino Land (83 HK): Sino Land Full Year Net Income HK$7.41 Bln
-          Sinopec (386 HK): Sinopec Shanghai Sees Brent at $47-$57 in Second Half: CFO
-          Tongda Group (698 HK): Tongda 1H Net Profit Drops 24% Y/y to HK$290.5m
-          Tsinghua Unisplendour (000938 CH): Unisplendour 1H Net 806.5m Yuan vs 265.3m Yuan Year Ago
-          Vanke (2202 HK): Vanke First-Half Profit Rises on Higher Margin Amid Housing Boom
-          Weifu High-Tech (200581 CH): Weifu High-Tech 1H Net 1.33b Yuan vs 943.6m Yuan Year Ago
-          Zhongjin Gold (600489 CH): Zhongjin Gold Corp 1H Net 212.4m Yuan vs 194.1m Yuan Year Ago
-          ZTE (763 HK): ZTE First Half Net Income 2.29 Bln Yuan

Japan
 
Analyst ratings
-    Auto initiations at SMBC Nikko
-    New outperforms: Mazda (7261), Toyota (7203)
-    New neutrals: Hino (7205), Honda (7267), Isuzu (7202), Mitsubishi Motors (7211), Nissan (7201), Subaru (7270), Suzuki (7269), Yamaha Motor (7272)
-          Daiichi Sankyo (4568): Raised to buy from outperform at Daiwa
-          Hankyu Hanshin (9042): Rated new outperform at Tachibana
-          Line Corp. (3938): Cut to neutral from buy at Mizuho
-          NSSMC (5401): Raised to hold from sell at Morningstar
-          NTT Data (9613): Cut to neutral from buy at Okasan Securities
-          Park24 (4666): Cut to neutral from buy at UBS
-          Tokyo Tatemono (8804): Raised to buy from neutral at Haitong

Preview
-          Don Quijote (7532): To take 40% stake in FamilyMart unit Uny
-          Kadokawa Dwango (9468): To buy back as much as 3.68% of shares for 3b yen
-          Otsuka Holdings (4578): Announces license agreement between pharmaceutical unit and Mylan to commercialize Delamanid for treating a type of tuberculosis
-          SoftBank (9984): Co. and Vision Fund invest fresh $3b in WeWork, additional $1.4b in newly created related cos.
-          Tepco (9501): Sued by individuals in U.S. court seeking $5b foundation fund and damages payment over 2011 earthquake.


Australia
 
Analyst ratings
 
-          AWC AU: Alumina Raised to Neutral at Credit Suisse, PT A$2.30
-          AHY AU: Asaleo Care Raised to Outperform at Credit Suisse, PT A$1.70
-          AHG AU: Automotive Holdings Raised to Buy at Morningstar
-          FLT AU: Flight Centre Cut to Sell at Morningstar
-          LOV AU: Lovisa Cut to Hold at Morgans Financial, PT A$4.84
-          NAN AU: Nanosonics Raised to Buy at Bell Potter, PT A$2.73
-          NZR NZ: NZ Refining Raised to Outperform at First NZ Capital, PT NZ$2.95
-          OZL AU: OZ Minerals Cut to Hold at Argonaut Securities, PT A$8.95
-          PPT AU: Perpetual Raised to Outperform at Credit Suisse, PT A$56.50
-          S32 AU: South32 Cut to Sector Perform at RBC
-          SUL AU: Super Retail Raised to Buy at Morningstar
-          TME NZ: Trade Me Raised to Neutral at First NZ Capital, PT NZ$4.40

Preview
-          NZK NZ: New Zealand King Salmon Says Full-Year Results Exceeded Forecast
-          QAN AU: Qantas Is Said to Plan Sydney-London Flight: Reuters
-          FSF NZ: Fonterra Still in Talks for Argentine SanCor Acquisition: Nacion
-          POT NZ: Port Of Tauranga Full Year Net Income NZ$83.4 Mln


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 While the Fed debates, many hope Jackson Hole will fill the void. Photo: Shutterstock


– Edited by Adam Courtenay


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