Morning Report APAC: Firming 'stay' vote hopes drive mining rally
- Oil-related currencies performed well with the rally in crude
- Industrial metals rallied and mining stocks rose to a one-week high
- Optimism that the UK would vote to stay in the EU drove the mining rally
- But money managers are still bearish on copper
- Platinum was the only precious metal to rally overnight
By Saxo APAC Sales Trading
Economic data of the day (Singapore Time: GMT plus 8 hours)
0930: AUD – RBA August Meeting Minutes
1700: EUR – Germany ZEW Survey Current Situation (Expected 53.0, Previous 53.1)
1700: EUR – Germany ZEW Survey Expectations (Exp. 4.8, Prev. 6.4)
2100: EUR - European Central Bank president Mario Draghi Speaks at European Parliament in Brussels
2200: EUR – Federal Open Market Committee chair Janet Yellen Testifies on monetary policy to Senate Banking Panel
- EUROPE: Germany’s Constitutional Court will issue a ruling on Tuesday on the constitutionality of the ECB’s Outright Monetary Transactions program
Oil-related currencies performed well with the rally in crude last night: namely CAD and MYR.
USD/Asia was still fairly well offered.
Bond yields fell sharply in the euro area peripheral countries but have jumped in the UK as investors assessed a reduced risk of Bank of England policy easing. The market has priced a little more risk of Fed policy tightening, especially at the September Federal Open Market Committee meeting.
The two-year note yield rallied 4 basis points to 0.733%. The 10-year bond yield is leaping 6.5bps to 1.673%.The US government sold $26bn two year notes with a yield of 0.745%, the lowest at an auction for that tenure since September and in line with pre-sale market levels.
US stocks piggybacked a global risk on, with a relief rally but closed off the highs at 0.6% after having been up as much as 1.4% very early in the session. Monday’s rebound was led by gains in consumer discretionary, industrial and technology shares. But as valuations are above the three-year average and profits still under pressure S&P500 may have trouble breaking the 2100 handle.
Boeing advanced 2.3% toward a five-week high contributing to industrials’ longest rally in two months. The company is nearing a $4bn deal with Russia’s largest air-freight company that would help extend the life of the 747 jumbo jet. Federal-Mogul Holdings jumped 9% after Carl Icahn raised his bid for the remaining 18% of the parts maker.
Travel-related companies such as Expedia, Priceline and TripAdvisor surged with increases of more than 2.5% following an upgrade at Atlantic Equities.
Credit Spreads recovered after peripherals bonds rallied.
Hong Kong equities preview
- China Vanke (2202 HK): Cut to neutral at Capital Securities.
- CNOOC (883 HK): Raised to buy at UBS.
- Vanke (2202): CR Land(1109) is interested in buying the entire 9.5% stake of company held by a state-owned enterprise in order to be the largest holder (Standard)...
- CSRC said to be monitoring co's restructuring dispute (SCMP).
- China Unicom (762) May net addition of mobile billing subscribers -4.93% MoM to 0.58m; while net addition of 4G subscribers +2.86% MoM to 4.50mln.
- China Telecom (728) May net addition of mobile billing subscribers -12.4% MoM to 1.34m, while net addition of 4G subscribers +9.1% MoM to 5.03mln.
- Beijing Ent (392) clarifies not participate in buying Urbaser, the recycling and waste treatment company in Spain.
- CCB (939) Temasek sold 555m shrs in CCB at at $HK5.01/share on June 16, reducing its stake to 5.66% from 5.88% previously.
- Samsonite (1910) Capital Group bought 866,600 shrs at avg HK$22.51/shr on June 15.
- Shimao (813) plans to start luxury housing project in Kowloon and new hotel in 2019 to avoid possible downturn in local property market (Standard).
- Lenovo (992) to revamp its smartphone manufacturing supply chain and a major global marketing push this year. (SCMP).
- Railway: NDRC approves 22.6bn yuan highway project In Gansu and 6.65bn yuan Inner Mongolia highway project.
- Weichai Power (2238) trading suspension to continue for up to five days for possible deal
- CLP (2) announced its first investment in India’s solar energy sector.
- Bright Smart (1428) FY revenue +31% YoY to $HK676mln while profit +49% YoY to $HK325mln.
- HKEX (388) announced that it will work to revise its stock option position limit (SOPL) model.
- CowelL (1415) says CEO Lee Sun Yong resigned, named Kim Kab Cheol the new CEO.
- CCT Land (291) and its partner intend to use $HK1.4bn to subscribe CCT Land new shares, upon completion, both parties will own more than 50% stake of CCT.
Japan equities preview
- Daikin (6367 JP): Raised to outperform at Macquarie; added to conviction buy list at Goldman.
- Harmonic Drive (6324 JP): Added to conviction buy list at Goldman.
- Hitachi Construction (6305 JP): Raised to neutral at Goldman.
- JTEKT (6473 JP): Cut to sell at Goldman.
- Mitsubishi Corp. (8058 JP): Cut to A2 at Moody’s.
- Nippon Express (9062 JP): Raised to neutral at UBS.
- Panasonic (6752 JP): Reinstated buy at Bof AML.
- Sumitomo Electric Industries (5802 JP): Lowered to neutral from outperform at SMBC Nikko Securities.
- THK (6481 JP): Cut to sell at Goldman.
- Yaskawa Electric (6506 JP): Removed from conviction buy list at Goldman
- Mitsubishi Motors (7211 JP): Credit rating downgraded to BBB- from BBB at R&I, with view to further cut.
- Asahi Co. (3333 JP): Parent op. profit for 1Q ended May 20 rose 12.6% y/y to ¥2.7bn.
- AWS Holdings (3937 JP): Begins trading on Mothers after IPO priced at ¥2,490.
- Citizen Holdings (7762 JP): Co. has ability to produce new mechanical watch mechanism, in process of deciding whether to make it in Japan or in Switzerland, CEO Tokura tells Le Temps.
- Daiichi Sankyo (4568 JP): To buy back 4.1% of shrs for as much as ¥50bn.
Daiwa House (1925 JP): Reposts earnings data originally given May 13 to correct cash flow figures.
- Fancl (4921 JP): May consolidated net sales rise 11.6% y/y.
- Hitachi Chemical (4217 JP): Co. fined $3.8mln by a California court on anti-trust issue.
- Kansai Electric Power (9503 JP): Nuclear Regulation Authority grants 20-year extension on co.’s Takahama reactors, Chairman Tanaka says.
- Kao (4452 JP): Agrees to acquire U.S.’ Collins Inkjet Corp. and Spain’s Chimigraf.
- Next (2120 JP): Invests in Jimoty; terms not disclosed.
- Nippon Electric Glass (5214 JP): Signs MOU to acquire some of PPG Industries’ ops.
- Strike (6196 JP): Begins trading on Mothers after IPO priced at ¥3,440.
- Toyota Motor (7203 JP): Says Brexit may lead to 10% levies on its UK-built cars.
Australia equities preview
- Westpac (WBC AU) raised to buy vs hold at Shaw & Partners.
- Metcash (MTS AU) cut to neutral vs overweight at JPMorgan.
- GPT Group (GPT AU) raised to neutral vs underweight at JPMorgan.
- Boral (BLD AU) cut to underweight vs equalweight at Morgan Stanley.
- Dexus (DXS AU) cut to underweight vs neutral at JPMorgan.
- Tegel Group (TGH NZ) FY NPAT rises to $NZ11.3 mln.
- Perseus Mining (PRU AU) plans equity raising up to A$A102mln.
- Growthpoint (GOX AU) considering divestment of industrial properties.
- Highfield Resources (HFR AU) names Peter Albert as MD/CEO.
– Edited by Robert Ryan
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