Article / 13 April 2018 at 1:59 GMT

Morning Report APAC: Stocks up in Asia after Trump tones down rhetoric

APAC Sales Trading Desk / Saxo Capital Markets
Singapore

 

  • Donald Trump dialled back his rhetoric on Thursday
  • The easing in geopolitical concerns saw gold fall close to 1.3% yesterday
  • Asian markets will welcome signs of a US rethink on joining the TPP trade pact
  • In forex markets, a miss in CPI numbers sent the Swedish kroner tumbling

By Saxo APAC Sales Trading

Economic data of the day (Singapore Time)

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Speeches (Singapore Time)

  • 1830 – Norway: Norway Central Bank Governor Oystein Olsen Speaks in Tromso.
  • 2000 – US: Federal Reserve's Eric Rosengren Speaks on Economic Outlook.
  • 2100 – US: Fed's James Bullard Speaks on Living Standards across US Cities.


Overnight news, US

  • Donald Trump dialled back both his geopolitical and trade rhetoric yesterday seeming to allow cooler head to prevail. This meant a risk-on day.
  • Trump tasked Trade Representative Robert Emmet Lighthizer and National Economic Council director Kudlow with revisiting the TPP agreement he pulled out of on his first day in office.
  • Secretary of Defence General Mattis said that military action was not the only action available in response to the chemical attack in Syria, others involved both diplomatic and economic.
  • Minneapolis Fed President Neel Kashkari suggested that fiscal stimulus may provide the lift to inflation that it needs.  

Overnight news, Europe

  • European Central Bank governing council member Jens Weidmann spoke firmly on price stability and rejected the idea that an overshoot in inflation is a good idea.
  • Swedish CPI missed estimated by 0.1% on both the headline and core number, sending the SEK tumbling lower. Headline 1.9% and core 2.0%.
  • Bank of England governor Mark Carney didn’t give much of a move to GBP, but spoke about a lost decade of real incomes after the global financial crisis and also on the impact automation is having on jobs, specifically in finance.
 

 

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  • USD: slightly strong versus majority of its G10 peers but an overall muted day.
  • GBP: Strengthened as EURGBP broke through its key support level and sent cable higher.
  • SEK: A miss in CPI numbers sent SEK tumbling by over 1%, reaffirming its status as the weakest G10 currency for the year.
  • Emerging Markets: The most beaten up EM currencies in the shape of TRY and RUB enjoyed a rest bite and rebounded yesterday. While the ZAR and BRL on the other side of the spectrum lost ground.


Foreign exchange movementsnnn













  • CNH vol sellers re-emerged below the one month tenure following the squeeze last week post the currency devalue talk.
  • RUB liquidity continues to remain a big issue.
  • TRY has seen vol buying over concern that the central bank may rapidly raise rates to defend its currency.
  • G10 currency trading remain extremely quiet and dull.

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  • US10 year yield move above the 2.8% level after slight risk-on in the equity market.
  • Spain outperformed with Moody’s rating decision in focus after the European close on Friday, with a potential upgrade to Baa1 from Baa2.


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US equities

  • The  Dow (+293 points) and S&P 500 (+21 points), stocks rose sharply on Thursday after President Donald Trump clarified his position on a possible missile attack in Syria, while bank shares popped ahead of earnings.
  • It was a big day for banks on Friday as Citigroup (C), JPMorgan (JPM), Wells Fargo (WFC) and PNC Financial Services (PNC) will report before the stock market's open. Analysts have raised 2018 estimates for all four stocks.
  • he focus shifts to earnings, Delta Air Lines (DAL) edged above the Street's view on earnings but missed slightly on revenue. The stock price rose 3% in volume 75% above average. Delta retook its 200-day moving average but fell short of the 50-day line. The stock is shaping a new base.
  • Financial management firm BlackRock (BLK) topped estimates on earnings and revenue. The stock rose 1.5% in average volume. BlackRock remains under its 50-day line as it works on a base.
  • Shares in Bed Bath & Beyond (BBBY) tumbled 20% to 17.21 after the retailer reported fiscal fourth-quarter sales and earnings that beat estimates, but gave a profit outlook that was a big disappointment. Net sales for the 14-week quarter were $3.72 billion, up 5.2% compared with the 13-week quarter a year earlier, and above analyst expectations for $3.68 bn.

European equities

  • European stock markets finished stocks closed higher on Thursday, as concerns over a potential military conflict in Syria eased. Earlier in the session, those fears were seen as keeping investors from making any big bets on the equity markets. But global stocks took a brighter tone after President Trump tweeted that a military strike on the Middle Eastern country may not be imminent. U.K.'s FTSE was up 1 point and Germany's Dax closed in green by 121 points.
  • Shares in Micro Focus International PLC (MCRO), soared 7.6% following a Bloomberg report that American billionaire Paul Singer’s Elliott Management hedge fund has established a stake in the business-software company and plans to push for changes. The stock remains down 50% for the year, weighed down by troubles with its merger with Hewlett-Packard Enterprise Co.’s HPE, software business.
  • Shares in Irish drugmaker Shire PLC (SHP), rose 2.7% after a Reuters report that Takeda Pharmaceutical Co. is in talks to secure a loan to buy the U.K.-listed company.
  • GlaxoSmithKline PLC (GSK), fell 0.5%. Late on Wednesday, Fitch Ratings cut its outlook on the pharma giant to “negative” from “stable,” citing concerns over how GSK will fund its plan to buy a 36.5% stake in Novartis AG NOVN, +1.18% . Meanwhile on Thursday, the drugmaker said it has signed a deal to transfer its rare-disease gene-therapy portfolio to Orchard Therapeutics in exchange for a 19.9% stake in the company.

Hong Kong equities

  • The Hang Seng Index (HSI) opened up 196 points or 0.6% but met resistance at 31,000, settling the day 66 points or 0.2% down at 30,831.
  • Tensions in Syria propelled New York oil futures by 2% to over three-year high. CNOOC (883.HK), being the best-performing blue-chipper, surged 3.7%. Petrochina (857.HK) and Sinopec (386.HK) gained 2.9% and 0.4%. Oil service stocks also saw support. China Oilfield (2883.HK) surged 6.2%.
  • Blue chips broadly eased back. AIA (1299.HK) retreated 1.4% to $70.6 after registering a new high yesterday. Tencent (700.HK) turned from four-day rise into 1.5% drop, dragging HSI by 84 pts alone. In contrast, Sunny Optical (2382.HK) rebounded 1.6%, while HSBC Holdings (5.HK) inched up 0.2%.

       

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 Back from the brink ... stocks soared on Wall St and European markets closed higher on Thursday, as concerns over a potential conflict in Syria eased. But oil prices are buoyant on Middle East tensions. Photo: Shutterstock

  
– Edited by Robert Ryan


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