Morning Report APAC: Gold shines, while crude collapses
- Oil collapsed overnight, after Russia said it hadn't planned any deeper output cuts
- Gold gained a little ground following the release of the FOMC minutes
- Base metals were softer in the wake of the stronger US dollar
- Grains gained amid a deepening drought in the US
By Saxo APAC Sales Trading
Economic data of the day (Singapore Time)
Speeches
- 1545 – US: The Federal Reserve's John Williams speaks in Hobart, Tasmania, Australia.
- 1800 – EC: ECB’s Peter Praet speaks in Paris.
- 2200 – US: The Fed’s Jerome Powell speaks in Washington on Housing Finance Reform.
- 0730 – US: The Fed’s Stanley Fischer speaks on government policy, Labor Productivity.
Overnight news, Fed
- The minutes of the June FOMC meeting showed that most of the policymakers believe that, even after a 25 basis point rate hike, current policy remains "accommodative" and will support a return to 2% inflation. In addition, a recent easing in financial market conditions (such as elevated equity markets and tight credit spreads) reinforces the case for tightening policy further. The Committee agreed that a move to start disinvesting some of the securities in the Fed's portfolio would be appropriate "this year."
Overnight news, North Korea
- The UN Security Council held an emergency meeting in response to North Korea's latest provocation as Kim Jong Un bragged about sending more "gifts" to President Trump. The Pentagon confirmed Pyongyang's first ICBM was a previously unseen missile with an estimated range in excess of 5,500 kilometres. Envoy Nikki Haley said the U.S. is prepared to use force and will go "its own path" if necessary. South Korean President Moon said the situation should be solved peacefully.
- North Korean leader Kim Jong Un vowed on Wednesday that his nation would "demonstrate its mettle to the US." and never put its weapons programs up for negotiations, a day after test-launching its first intercontinental ballistic missile. The hard line suggests more tests are being prepared as the country tries to perfect nuclear-armed missiles capable of striking anywhere in the US.
Overnight news, US
- Factory Orders were lower than expected at -0.8% (Exp. -0.5%) and Durable Goods Orders printed -0.8% as expected but orders for capital equipment were a bit stronger than previously reported, suggesting the manufacturing sector remained on a moderate growth path.
Foreign exchange
- USD was slightly bid at the start of trading in New York, with few macro events creating some small tension in the market, associated with the FOMC minutes, North Korea's missile launch, and tech stock jitters. but finished unchanged on the day. The thing to watch now will be G20 meeting this week end and nonfarm payrolls on Friday, with some downside risks and a potential move higher of the USD against G10 currencies.
- Emerging Markets: USD was mixed overnight against EM currencies with the main moved being USDZAR up 2% after South Africa's ruling party proposed making the central bank wholly state-owned, then recovered somewhat after the ANC said the government can't afford it right now. Either way, the South African Reserve Bank's independence wouldn't be affected, bank and ANC officials claimed.
- The one week USDCAD Vol is bid for the Bank of Canada meeting. The market is just interested in owning gamma for the event.
- There is good supply in EUR vega by Corporates.
- US Treasuries ended a volatile day little changed, early gains were driven by a slide in oil, followed by losses triggered by the latest FOMC minutes were erased into close and curve bear flattened in response, with 5s30s (the spread points between five and 30 year yield) dipping back to middle of day’s range.
- German 10 year bonds bounced after yields approaching the 0.50% level, widely highlighted as a key level, which has capped twice before this year. Gilt/bund spread widened as much as 3bps in 10 year, and close to 4 basis points in 30 year.
Commodities
Equities
- Both the Nasdaq and S&P 500 finished higher, while the Dow slid lower as the FOMC minutes indicated a reduction in the central bank’s economy-boosting balance sheet could begin soon.
- Tesla Inc. plunge 7.2% into correction territory in the wake of downbeat deliveries data. Goldman lowers its six-month price target for Tesla to $180 from $190, reiterating its sell rating for Tesla shares, saying the company will likely have issues meeting its car production targets this year.
- A new fund led by Greystar Real Estate Partners, the largest operator of apartments in the US, will acquire luxury U.S. apartment developer Monogram Residential Trust (+21.33%) in a deal valued at about $3bn, the companies said on Tuesday.
- European stocks ended moderately positive, supported by rally in financial services companies and retailers offset declines in the oil and gas names.
- Automakers were under pressure with BMW AG and Daimler AG declined 0.9% and 0.6%, respectively, after U.K. car registrations dropped 4.8% in June, according to the Society of Motor Manufacturers and Traders.
- Sports apparel maker Adidas AG jumped 4.9% after a ratings upgrade to buy from hold at HSBC, while drugmaker GlaxoSmithKline PLC moved 0.2% lower following a downgrade to neutral from buy at Citigroup.
Hong Kong analyst views
- China Oriental Group (581 HK): New Buy at First Shanghai, PT $HK5.13.
- Anhui Conch (914 HK): H Shares New Buy at China Merchants.
- Anta Sports (2020 HK): Raised to Buy at Deutsche Bank.
- Anton Oilfield (3337 HK): Cut to Underperform at Credit Suisse, PT $HK0.50.
- China Foods (506 HK): Raised to Buy at Maybank, PT $HK5.17.
- China National Building (3323 HK): H Shares New Neutral at China Merchants.
- China Vanke (000002 CH): A Shares Raised to Buy at Citic Securities.
- CRRC Times (3898 HK): H Shares New Add at GF Secs.
- Great Wall Motor (2333 HK): H Shares Raised to Overweight at Morgan Stanley.
- Hilong (1623 HK): Cut to Neutral at Credit Suisse, PT $HK1.40.
- PetroChina (857 HK): H Shares Raised to Neutral at Credit Suisse, PT $HK5.
- PetroChina (857 HK): H Shares Cut to Market Perform at Bernstein.
- PetroChina (601857 CH): A Shares Cut to Underperform at Bernstein.
- Sinopec (386 HK): H Shares Raised to Outperform at Bernstein, PT $HK7.50.
- SPT Energy (1251 HK): Cut to Underperform at Bernstein, PT $HK0.42.
Hong Kong stocks
- Sunac June Property Contract Sales Jump 100% Y/y to 28.5b Yuan.
- SPIC in Contact With Huaneng Group for Restructuring: The Paper.
- China Resources Land Buys 4.5B Yuan of Land in June.
- China Aoyuan Offers to Buy 22% of China Sports Industry Group.
- Macau Legend Intends to Sell The Landmark Macau Property.
- Kaisa Group 1H Contract Sales Total 22.5B Yuan.
- Sunac Unit Increases Stake in Le Vision to 21%, QQ.Com Reports.
- CITIC Telecom Says Planned Citic Networks’ Stake Purchase Lapsed.
- China Unicom, Minsheng Bank to Cooperate on Big Data, Finance.
- Sinopec Addax Unit Ordered to Pay CHF31 Mln by Swiss Prosecutor.
- CD Projekt Slumps on Risks of China Curbs on Online Game Makers.
- TVB Says Clarifies China Media Tycoon Li Ruigang’s Ownership.
Japan analyst views
- Benesse (9783) Upgraded to Neutral at Daiwa; price target raised to ¥4,300.
- Japan Display (6740) Cut to Underperform at SMBC Nikko; PT ¥170
- Kewpie (2809) Upgraded to Buy at Mizuho; PT Raised to ¥3,540.
- Nikon (7731) Upgraded to Buy at Goldman; PT Raised to ¥2,300.
- Pigeon (7956) Upgraded to Neutral at Goldman; PT Raised to ¥3,800.
- Shimadzu (7701) Upgraded to Overweight at Morgan Stanley; PT ¥2,600..
Japan stocks
- ABC-Mart (2670): Q1 operating profit -2.6% y/y to ¥13.97bn, maintains full-year forecast at ¥42.5bn.
- Aeon (8267): Swings to Q1 net profit of ¥3.7b yen from loss of ¥6.3bn a year ago; maintains full-year forecast at ¥15bn.
- Daiichi Sankyo (4568): To discontinue development of biosimilar for etanercept, a drug for treating rheumatoid arthritis, citing challenges in commercial production.
- Futaba Industrial (7241): Lifts net income outlook for six-month period ending Sept. to ¥1.65bn, more than triple its previous forecast for ¥500mln.
- Hiday Hidaka (7611): June same-store sales +2.1% y/y.
- Idemitsu Kosan (5019): Signs tie up with South Korea’s LG Chem for OLED materials.
- Jins (3046): June same-store sales +3.4% y/y.
- Koshidaka Holdings (2157): 9-month operating profit +34% y/y to ¥4.9bn, raises full-year outlook 7.8% to ¥5.9bn.
- Lacto Japan (3139): Preliminary half-year operating profit at ¥1.8bn, nearly triple company’s forecast for ¥596mln.
- Lawson (2651): Q1 operating profit at ¥16.3bn vs. analyst estimate for ¥16.4bn; maintains full-year forecast at ¥68.5bn.
- Mitsui & Co. (8031): to buy U.S. healthcare staffing company for more than ¥10bn.
- Nachi-Fujikoshi (6474): Half-year operating profit +20% y/y to ¥7.7bn, beating company forecast by 10%.
- Nissan Motor (7201): China June vehicle sales +8.9% y/y to 118,769 units; new Leaf model, including autonomous parking, to premiere September 6
- Ryohin Keikaku (7453): Q1 operating profit +3.9% y/y to 11.9b yen vs. analyst estimate for ¥12.4bn.
- Tosei (8923): Half-year operating profit -19% y/y to 6.2b yen, maintains full-year forecast at ¥10.0bn.
- United Super Markets Holdings (3222): Q1 operating profit -25% y/y to ¥2.7bn, maintains full-year forecast at ¥14.8bn.
- Welcia Holdings (3141): Q1 operating profit +44% y/y to ¥6.4bn, keeps full-year forecast at ¥26.3bn.
- Magellan Financial (MFG): Cut to neutral at Credit Suisse, price target $A27
- Santos (STO): Cut to market perform at Bernstein, PT $A3.40.
Australia stocks
- Australia bets $68b Navy spend on global export industry.
- Aussie divergence to New Zealand, US rates to continue: NAB.
- Arrium (ARI): S. Korean group said to be still interested in Arrium: Reuters.
- ANZ Bank (ANZ): Said to narrow bidders in $3b sale of wealth unit.
- BHP Billiton (BHP): New chairman to drive ‘radical shift’ at world’s top miner; Raised to buy at Deutsche Bank; Escondida reaches pact with union on worker shifts.
- Computershare (CPU): Pairing with UniSuper for South Australia land titles bid: AFR.
- Fortescue (FMG): Iron’s going back down to $50 on supply, top forecaster says.
- Flight Centre (FLT): Short sellers burnt again at travel agency punishing naysayers; Cut to underperform at Credit Suisse, price target $A37.41.
- Metcash (MTS): Trades ex-div..
- Monash IVF (MVF): Report on problems between company doctors is false.
- Programmed Maintenance (PRG): Trades ex-div.
- Seek (SEK): May be among potential bidders for Open Universities Australia: AFR.
- Woodside (WPL), WorleyParsons (WOR), Oil Search (OSH), Beach Energy (BPT), Karoon (KAR), Origin Energy (ORG), Santos (STO): Oil tumbles as Russia said to oppose deeper production curbs.
– 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
All material contained herein is provided for your general information. The information and commentaries are not intended to be and do not constitute financial advice, investment advice, trading advice or any other advice or recommendation of any sort offered or endorsed by Saxo Capital Markets Pte. Ltd. (“SCM SG”). Any expression of opinion (which may be subject to change without notice) is personal to the presenter and/or author; they do not reflect the view or opinion of SCM SG or its affiliates, neither do they constitute an endorsement of SCM SG’s view or analysis of the same.
None of the information contained here constitutes an offer to purchase or sell a financial instrument, or to make any investments. SCM SG does not take into account your personal investment objectives or financial situation and makes no representation and assumes no liability as to the accuracy or completeness of the information nor for any loss arising from any investment based on any commentaries or information provided here.
For further information, please click here.
Saxo Capital Markets Pte Ltd ("Saxo Capital Markets") is a licensed subsidiary of Saxo Bank A/S, an online trading and investment specialist. Saxo Capital Markets serves as the APAC headquarters and holds a capital markets services licence under the Monetary Authority of Singapore; and a commodity broker licence issued by the International Enterprise Singapore. Clients can trade Forex, CFDs, Stocks, Futures, Options and other derivatives via SaxoWebTrader and SaxoTrader, the leading multi-asset online trading platforms.
Trading risks are magnified by leverage - losses can exceed your deposits. Trade only after you have acknowledged and accepted the risks. You should carefully consider whether trading in leveraged products is appropriate for you based on your financial circumstances. Please consider our Risk Warning and General Business Terms before trading with us. Please see full General Disclaimer.
Thousands of serious traders receive free news and analysis from Saxo Capital Markets each day. Saxo Capital Markets never sends these emails unsolicited; they are sent following acceptance of your membership and subscription request by Saxo Capital Markets at saxomarkets.com.sg. If you do not wish to receive any emails from Saxo Capital Markets in the future, please reply to this email with the word "UNSUBSCRIBE" in the subject header.
Copyright | Disclaimer | Risk Warning | Privacy Policy | Contact Us
Samsung Hub | 3 Church Street | # 30-01 | Singapore 049483
Company No. 200601141M
