Morning Report APAC: GBP rallies on 'no news'
- The USD selloff continued at a slower pace following the poor payroll number
- Emerging markets currencies are the beneficiaries of the USD selling
- The GBP rallied 130 pips on no apparent news
- The S&P 500 hit its highest level since late July before profit-taking set in
By Saxo APAC Sales Trading
Economic data of the day (Singapore Time; GMT+8)
- 0750: JPY – GDP SA QoQ (Exp. 0.5%, Act. 0.5%), Annualised (Exp. 1.9%, Act. 1.9%)
- 1630: GBP – Industrial Production MoM (Exp. 0.0%, Prev. 0.3%), IP YoY (Exp. -0.4%, Prev. -0.2%)
- 1630: GBP – Manufacturing Production MoM (Exp. -0.1%, Prev. 0.1%), YoY (Exp. -1.5%, Prev. -1.9%)
CNY – China Exports YoY (Exp. -4.0%, Prev. -1.8%), Imports YoY (Exp. -6.8%, Prev. -10.9%)
CNY – Trade Balance (Exp. $55.7Bn, Prev. $45.56bn)
- US nonfarm productivity fell at a slower than first estimated rate in Q1 but has now declined in four of the last six quarters. Productivity, a measure of hourly output per worker, contracted at a 0.6% annualised rate (Exp: -0.6%), an improvement from the initial estimate of minus 1.0% last month.
- Output per worker was revised to 0.9% (Prev: 0.4%). Unit labour costs rose at an upwardly revised 4.5% (Exp: 4.0%) from the initial estimate of 4.1%. Hourly compensation increased at a 3.9% annual rate and rise 3.7% over the past year, the largest annual gain in two years.
Interest rates declined led by the German 10-year bund yield which fell to a fresh record low of 0.045% ahead of the European Central Bank implementing corporate bond purchases and the US 10-year Treasury yield fell to 1.72.
The interruption in the Fed’s June tightening plan has spurred a rally in risk appetite and return to investors who stayed on the sidelines in May. Despite the higher yields seen in the Australian 10-year government bond in the wake of yesterday's Reserve Bank of Australia statement, we would expect a drop in yields today.
US stocks closed marginally higher with the S&P 500 edging 0.13% up to 2112.13 after paring most of its gain in the final hour of trading. WTI crude oil settled above $50/barrel for the first time in over 10 months and a rally in energy producers offset slumping healthcare and bank shares – Goldman Sachs posting among the biggest declines in the Dow.
The Dow briefly traded above the psychologically key 18,000 level for the first time since April 28 and the S&P 500 hit its highest level since late July before profit-taking set in.
United Natural Foods gained 14% after boosting its annual earnings and sales forecasts. Alexion Pharmaceuticals tumbled 11% after its drug for a rare neuromuscular disease didn’t meet its primary goal in a final-stage trial.
The rally seen in Treasuries the past two days has pushed lower the CDS indices, doing some catch up. The main movers being the Itraxx Europe.
- China Comm Const (1800 HK): Cut to hold at Morninstar
- China Galaxy Securities (6881 HK): Raised to hold at Daiwa
- China Mobile (941 HK): Cut to hold Deutsche Bank
- China Shenhua (1088 HK): Cut to hold at Morningstar
- Evergreen Marine (2603 TT): Raised to buy at President
- Chow Tai Fook(1929) FY net profit down -46.1% YoY to HK$2.9bn vs est of HK$3.2bn; a net forex loss of HK$229mn due to RMB volatility
- CKH(1) and VimpelCom made a formal offer of concessions to EU antitrust regulators probing their deal to combine Italian mobile phone units
- Yuzhou PPT(1628) May contracted sales was RMB2.28bn, +120% YoY; contracted sales for the first five mths was RMB10.4bn, +150% YoY
- Yuexiu PPT(123) May contracted sales was RMB2.1bn, -13% YoY; contracted sales for the first five mths was RMB13.5bn, +66% YoY
- Central China Real Estate(832) May contracted sales was RMB2.6bn, +152% YoY; contracted sales for the first five mths was RMB5.3bn, +21.1% YoY
- Newtree(1323) issued profit warning, sees substantial loss for the year ended March 31, 2016
- China Reinsurance(1508) says its Singapore branch licensed to carry out general business as reinsurer in country
- Guolian Sec(1456) May net profit was RMB61.8mn, +23% MoM
- Skyworth Digital(751) May TV sales +15% YoY to 1.059mn units
- Far East Horizon(3360) plans to issue 2bn yuan of asset-backed notes by selling leases to a special-purpose trust set up by Ping An Trust; it is China's first asset-backed note sale via trust
- Hang Fat(911)'s ED Yeung Wing Yan said he was “coerced and deceived” into signing 1.2bn Hang Fat shares over to a company controlled by Huishan Dairy chair Yang Kai in Feb
- Guangdong Land(124) to buy Buxin Land rights for RMB2.27bn
- Kaisa(1638)'s default offshore bond rallied 167% amid restructuring
- Chuan Hld(1420) debut today, grey market closed at HK$0.74, down 15.9% vs listing price of HK$0.88
- Chubu Electric (9502 JP): Raised to buy at Mizuho
- Daiwa House Industry (1925 JP): Raised to outperform from neutral at SMBC Nikko Securities
- Kajima (1812 JP): Raised to buy from hold at Jefferies
- Kansai Paint (4613 JP): Cut to hold from buy at Jefferies
- Rinnai (5947 JP): Cut to underperform from neutral at SMBC Nikko Securities
- Sony (6758 JP): Raised to hold at BNP Paribas
- Sompo Japan (8630 JP): Raised to buy at Daiwa
- Sumitomo Forestry (1911 JP): Raised to neutral from underperform at SMBC Nikko Securities
- Tokio Marine (8766 JP): Raised to buy at Daiwa
- Toto (5332 JP): Lowered to underperform from neutral at SMBC Nikko
- AI Holdings (3076 JP): Fidelity Investments increases stake in co. to 9.56% from 7.64%
- Dentsu (4324 JP): May parent-based sales fall 0.4% y/y
- Gurunavi (2440 JP): Fidelity Investments reduces stake in co. to 4.18% from 5.2%
- Inpex (1605 JP): Plans exploratory well off Japan’s west coast
- JGC (1963 JP): Technip and partners JGC and Samsung Heavy win FLNG contract for Coral field run by Eni, Africa Intelligence reports
- Kubota (6326 JP): Co., NTT (9432 JP) and NTT Communications to develop ICT solutions for agriculture and water infrastructure
- Kyocera (6971 JP): Japan’s SESC recommends fine for co. worker for insider trade
- Kyushu Electric (9508 JP): Estimates 10bn yen for quake-related repair cost; expects additional capex spending of 10bn yen from quake
- MTI (9438 JP): To sell 876.3mln yen of Treasury shares in private sale to Medipal Holdings (7459 JP)
- Rakuten (4755 JP): To close marketplaces in UK, Spain, and Austria, focus on France and Germany
- Renesas Electronics (6723 JP): Expects Q1 profits to plunge after Kumamoto earthquake
- ReproCell (4978 JP): Co. and Kyoto University tie up on self-replicating RNA iPS research
- SkyCity Entertainment (SKC NZ) says retail bookbuild cleared at NZ$4.66/shr
- Xero (XRO NZ) signs deal with Wells Fargo on data software, Business Insider reports
- BHP Billiton (BHP AU) among final bidders for Anglo American’s Australian coal mines; Adara agrees to buy BHP’s stake in joint coal ops for $120mln
- Rio Tinto (RIO AU) starts new cash tender offer for up to $3bn notes
- Scales Corp. (SCL NZ) annual meeting
- Myer (MYR AU) CEO Richard Umbers speaks at AICC event, Sydney
- Greencross (GXL AU) raised to buy vs hold at Morningstar
• A2 Milk (ATM NZ) rated new buy at Bell Potter
– Edited by Gayle Bryant
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.
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