Article / 21 March 2017 at 2:07 GMT

Morning Report APAC: Gold firms, base metals sold off

APAC Sales Trading Desk / Saxo Capital Markets


  • Fed officials are giving mixed signals on forward guidance
  • The UK faces a hard Brexit given comments from EC President Jean-Claude Juncker
  • Gold firmed at around $1230/oz as USD remained steady after European trading

By Saxo APAC Sales Trading

Economic data of the day (Singapore Time)


Speeches (Singapore time)

  •  0830 – Australia – Reserve Bank of Australia March rate meeting minutes 
  • 1620 – US – Federal Reserve's William Dudley speaks on reforming bank culture at closed event 
  • 0000 – US – Fed’s Esther George speaks in Washington on US economy and the FED 
  • 0345 – Canada – Bank of Canada deputy governor Lawrence Schembri speech 
  • 0600 – US – Fed’s Loretta Mester speaks at university of Richmond 
  • 0750 – Japan – Bank of Japan minutes of January 30-31 meeting

Overnight news, US

  • FBI Director James Comey confirmed the agency is probing Russia's interference in the 2016 presidential campaign, including possible ties to the president's associates. He also rejected Trump's repeated allegation that former President Obama wiretapped Trump Tower last year. "I have no information that supports those tweets," Comey told the House Intelligence Committee. 

  Overnight news, UK

  • The British PM will finally trigger Brexit on March 29 to start the two-year process of talks to leave. The bloc responded by cancelling plans for an April 6 summit to agree on the outlines of their position. It could be held at the end of April or early May, eating into the negotiation period. 
  • The U.K. won't get special privileges and will be treated as an outsider after Brexit, EC President Jean-Claude Juncker told Bild am Sonntag. "The choice is to eat what’s on the table or not come to the table at all." 

 Overnight news, Federal Reserve

  • Fed Chicago President Charles Evans said the Fed could raise interest rates up to four times this year and that he backs two to three times. The Minneapolis Fed president doesn’t agree and said "The data are basically moving sideways, so I’m asking, what’s the rush to raise rates.". 

  Overnight news, China

  • China's Vice Finance Minister Xiao Jie said Beijing will "appropriately" increase fiscal spending in 2017 and continue to cut taxes and fees.




  • There was very little movement in the USD overnight with DXY staying the strong support of 100. The only things to watch this week are the Fed speakers. 
  • GBPUSD is trading at the resistance made from the 100 day moving average at 1.2413. We have seen some offers last night following the confirmation of the Article 50 trigger end of March but no major moves. 
  • USDJPY remains below the 100 day moving average and the main support is at ¥111.75. Only a break below could trigger strong selling interest and a surge in vol.   
  • Emerging Markets: USD continues to be well offered against EM currencies. USDKRW gapped lower to break 1,120 support. The main support now is at 1090 following long USD stops and good economic data (PPI at 4.2% YoY). And Finance Minister Yoo failed to make any progress on currency manipulator issue from talks with US Treasury Secretary Mnuchin, fear of currency manipulator accusations spread, pushing the pair beyond the yearly low levels. The pair closed at 1114 level and the next key support lies at 1100. Last month's foreign currency deposit by residents hit a record high, suggesting that most onshore corporations were holding onto USD and less active in hedging (Source: DB)


  • EM vols have collapsed after the Federal Open Market Committee meeting. One-month ATM in USDKRW dropped from 10.9 to 9 before finding good support. It looks like the market is short gamma at this level of spot, creating some interests to buy USD Puts as a hedge.
  • EURUSD Risk Reversal moved back to favour EUR Puts in the short term, while one month is back below 0.  But the interest for EUR Calls remains strong. Anything after the French election is favouring EUR Calls.







  • US stock indices closed slightly lower Monday for the third straight day of losses, as trading was muted without major economic or corporate news, with financials and energy stocks putting pressure on the S&P500
  • Caterpillar Inc. led the gains as shares were up 2.7% after the industrial-equipment maker reported encouraging February retail machine-sales data. 
  • Advanced Micro Devices surged 6.8% after a note from Jefferies investment bank lifted its sales estimate for the company in anticipation of new product launch. 
  • Stoxx Europe 600 finished lower Monday, with the week starting on a downbeat note after logging its strongest closing since December 2015 last week. 
  • Deutsche Bank AG fell 3.7% lower after the German lender issued new shares to raise nearly $9 billion and also indicated that it slashed bonuses paid to staff by 80% last year after suffering its second consecutive full-year loss. 
  • Hugo Boss shares dropped 4.7% on Monday on news the German clothier had reportedly failed to attract an investment from Belgian investment firm Groupe Bruxelles Lambert.

Asian shares preview

Hong Kong analyst views

  • China Resources Gas (1193 HK): Cut to outperform at Daiwa Securities.
  • Sinopec Engineering (2386 HK): Raised to overweight at JPMorgan; raised to neutral at Credit Suisse.

Hong Kong equities

  • China Graphene (63 HK): Posts $HK56.7mln net loss for 2016. 
  • China Jushi (600176 CH): FY net 1.52b yuan vs 983mln yuan previous year. 
  • Evergrande (3333 HK): March 28 board meeting to include dividend talks. 
  • Founder Securities (601901 CH): FY net 2.58bn yuan vs 4.06bn yuan. 
  • Goldin Properties (283 HK): Controlling holder plans privatisation Offer. 
  • Goldlion (533 HK): FY net profit HK$388.8mln. 
  • HEC Pharma (1558 HK): 2016 net profit rises 43% to $380.6mln yuan. 
  • Chong Hing Bank (1111 HK): Hong Kong Life Insurance sold to First Origin for $HK7.1bn.
  • HSBC (5 HK): Laundered Russian cash flowed through major banks: Guardian. 
  • Jinchuan Intl (2362 HK): To raise HK$386.4mln from share sale. 
  • Jinhui (137 HK): FY net loss HK$805.4mln. 
  • Kuangchi Science (439): Says 2016 profit to increase “substantially”. 
  • Offshore Oil Eng (600583 CH): FY net 1.32b yuan vs 3.41bn yuan year ago. 
  • Perfect Group (3326 HK): 2016 net profit falls 38.5% to HK$34.7mln. 
  • Qinqin Foodstuffs (1583 HK): 2016 net profit $31.5mln yuan vs $63.8mln in 2015. 
  • Sinopec Engineering (2386 HK): Targets $5.6b worth of contracts in 2017. 
  • Time Watch (2033 HK): 6-mo. net HK$101.5mln vs HK$169.5mln.

Japan analyst views

  • Brother Industries (6448): Raised to buy at Goldman. 
  • Hosokawa Micron (6277): Raised to outperform at Iwai Cosmo. 
  • JVC Kenwood (6632): Raised to buy at Okasan Securities. 
  • Konica Minolta (4902): Cut to neutral at Goldman. 
  • Kubota (6326): Cut to neutral plus at Iwai Cosmo. 
  • Kuraray (3405): Raised to buy at Mizuho. 
  • Mitsui Mining (5706): Rated new buy at Marusan Securities. 
  • Nippon Chemi-Con (6997): Raised to equalweight at Morgan Stanley. 
  • Prima Meat (2281): Rated new outperform at Tokai Tokyo. 
  • Rakuten (4755): Cut to hold at Morningstar. 
  • Seed (7743): Initiated at Storm Research. 
  • Takara Leben (8897): Cut to hold at BNP Paribas. 
  • Toshiba (6502): Credit rating cut to CCC- by S&P. 

Japan equities

  • Ajinomoto (2802): To build beverage factory in Myanmar for ¥2.5bn. 
  • Bull-Dog Sauce (2804): Names Shoko Ikeda as co. chairwoman. 
  • Hitachi Maxell (6810): To become holding company on October 1. 
  • Hosokawa Micron (6277): Raised to outperform from neutral plus at Iwai Cosmo Securities; six-month PT at ¥1,020 from ¥620. 
  • Isuzu Motors (7202): Chairman Susumu Hosoi gives up rights to represent co. 
  • Japan Tobacco (2914): February cigarette sales volume slips 12.4% y/y. 
  • Sosei Group (4565): Fails to meet criteria to move to TSE first section after reporting an oper. loss for year ended March 2016. 
  • Star Asia Investment (3468): Seeks to raise 6.61b yen from public share sale, to use proceeds to acquire property. 
  • Sumitomo Realty & Development (8870): Offers 24% premium from Friday’s closing price to buy ~30% stake in Sumitomo Real Estate Sales. 
  • Tepco (9501): Wants to issue foreign bonds should the opportunity arise; co. and Japanese government ordered by a district court to compensate a group of evacuees for emotional distress following Fukushima nuclear accident, NHK reports. 
  • Toshiba (6502): Chief Cabinet Secretary Yoshihide Suga says co.’s Yokaichi plant is important for Japanese jobs, and the chip business important for security reasons. 

Australia analyst views 

  • -APN News (APN): Rated new buy at Canaccord, PT $A3.25 
  • Aurizon (AZJ): Cut to sell at UBS, PT $A4.80 
  • Bionmoics (BNO): Rated new buy at Rodman & Renshaw, PT $A2 
  • Fletcher Building (FBU): Raised to outperform at RBC; Raised to outperform at First NZ Capital 
  • Ramsay Health (RHC): Raised to outperform at Credit Suisse; PT A$74.50 
  • REA Group (REA): Cut to neutral at UBS; PT Raised to A$58 
  • Virtus Health (VRT): Cut to hold at Morningstar 

Australia equities

  • BHP Billiton (BHP): Striking Escondida workers accept invitation to resume talks. 
  • Commonwealth Bank of Australia (CBA), ANZ Bank ,Westpac (WBC), National Australia Bank (NAB): ‘Bubbly’ Australia housing market may lead to more lending curbs. 
  • Crown Resorts (CWN): Macau casino March rev. could exceed est., Bernstein says. 
  • Downer EDI (DOW), Spotless Group Holdings Ltd (SPO): Said to get 19.9% Spotless stake ahead of takeover offer. 
  • Fairfax Media (FXJ): TPG Capital may be among those interested in Domain: AFR. 
  • Mantra Group (MTR): May be a potential takeover target via an Asian party or InterContinental: Australian 
  • Premier Investments (PMV): 1H results expected; NOTE: Co. in February forecast 1H underlying retail Ebit A$92m-A$93m; 1H unaudited sales ~$A588.6mln. 
  • Rio Tinto (RIO): China’s iron ore outlook is ‘music to my ears,’ CEO says. 
  • Seven Group (SVW): Caterpillar February Asia/Pacific machine sales +39% vs +26% in Jan.; NOTE: Is authorised dealer in West Australia, NSW, North China. 
  • TPG Telecom (TPM): 1H results expected; NOTE: Rev. est. A$1.24b (3 analysts). 
  • Virgin Australia (VAH): Welcomes ACCC interim approval of HNA alliance.


 A rising rig count and the reopening of some Libyan ports are weighing on crude prices. Photo: Shutterstock

– 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. Follow us on @SaxoStrats on Twitter

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