Article / 24 February 2017 at 1:41 GMT

Morning Report APAC: Gold surges on weak USD, base metals slump

APAC Sales Trading Desk / Saxo Capital Markets
Singapore

 

  • Gold surged on USD weakness after Treasury Secretary Mnuchin's interview 
  • Copper led a slump in base metals, despite the threat of supply disruptions
  • Oil prices rebounded on crude output compliance comments from Opec
  • There are mixed signals on whether the US sees Beijing as a FX manipulator
  • The lack of news on French politics gave euro watchers a breather

By Saxo APAC Sales Trading


Economic data of the day (Singapore Time: GMT plus 8 hours)
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Overnight news: US

  • The highlight from the US overnight was Treasury Secretary Steve Mnuchin’s interview where he talked about the tax reform bill being passed in the summer of this year. He made no promise on the boarder adjustment tax (BAT) which is seen as a bullish USD policy.
  • Mnuchin struck a very different chord on China than some of Trumps campaign rhetoric. He said he has terrific talks with China and was no rush to name a currency manipulator.
  • US stocks had a quiet session ending flat, this despite UST yields declining 2.37% and a weaker USD.
  • Secretary of State Rex Tillerson in Mexico: It was evident that US-Mexican relations have soured. The post meeting press conference contained thinly veiled disdain from Mexican President Enrique Peña Niet .

Overnight news: Europe

  • German GDP data was exactly in line with expectations. 1.7% q4 annualised. More interesting was the sizable uptick in trade with Exports up to 1.8% Q/Q vs 1.4% expected and Imports at 3.1% vs 1.8% expected. Strong data continues in Germany.
  • Italy's retail sales were poor, missing expectations by a mile. Falling y/y to -0.2% versus a +0.9% expectation.
  • The lack of news on French politics gave euro watchers a breather.

 

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  • USD: Fell post Mnuchin interview with the technical picture looking increasingly dire in the near term for the USD.
  • GBP: continues to show great strength having held along its 100 day moving average. The currency has broken above its descending triangle, painting a bullish picture on its prospects for having a go at reaching resistance at 1.270.
  • Emerging Markets: EM currencies continue to roar higher with strong performances from Mexican peso, the Colombian peso and the South African rand yesterday.
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  • The vol story remains consistent in Europe and around the euro. Bid over French election dates.
  • Vol before the March Federal Open Market Committee dates has seen a consistent offer.
  • Lastly, USDCNH curve was further pressured to move lower yesterday as the spot moved lower. This pushed all CNH vols lower as a result. 

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  • US yields were lower across the curve as market backed down a bit from pricing early for Trump’s potential fiscal policy.
  • The optimism about treasuries spread globally, with core Europe bond yields (Germany and France) dropped across the curve.
  • Italy yield picked up as concession was seen built up ahead of next week’s 10-year note sales.

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Equities

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  • US market was mixed as the Nasdaq was impacted by analyst downgrades and earnings miss in the components. Both the S&P 500 and Dow Jones Industrial closed marginally higher with the DJI closing at record high yet again.
  • European markets finished broadly lower today with shares in Germany leading the region. The Dax is down 0.42% best performing region was the France's CAC 40 which was down by 0.09%
  • Shares of Tesla were down 6.41% on closing after the company posted a wider-than-expected fourth quarter loss. Despite Elon Musk assuring the shareholders that its latest model – Sedan 3 is still on schedule for release on July, earnings missed analysts' expectation and came in at -$1.25. Click here for the article from Saxo  Bank's head of equity research Peter Garnry on Tesla: Can Elon Musk live up to investors' wildest dreams? – #SaxoStrats.
  • Shares of graphics chip maker NVIDIA Corp. NVDA was down over 9% after multiple analysts downgraded the stock. Some analysts have also slashed price target to below $100 on unsustainable earnings and a slowdown in the gaming sector. On the technicals, Nvidia traded below its 50 day moving average could be a concern as it had always been a vital support for Nvidia since the chip maker's rally early last year.
Asia Pacific equities

Hong Kong analyst views

  • Geely Auto (175 HK): Cut to outperform at Daiwa.
  • Gome (493 HK): Raised to add at CIMB.
  • PetroChina (601857 CH): Raised to buy at Jefferies.

Hong Kong stocks

  • Coal: Shanxi to continue mining rights approval halt: Xinhua.
  • NEV: China electric car quota spurs A123 to double battery output.
  • Internet: State Council calls for faster Internet, lower fees.
  • AIA (1299 HK): 2016 VONB beats est.; signs revised bancassurance deal with Bank Central Asia.
  • Do-Fluoride (002407 CH): Preliminary FY net 517.1mln yuan vs just 39.2mln yuan year ago.
  • Glencore (805 HK): Agriculture head says “time is good” for US deals.
  • Gree Electric (000651 CH): Cooperation with Yinlong meets development goal.
  • Han’s Laser (002008 CH): Prelim. FY net 765.6mln yuan versus 747mln yuan year ago.
  • HSBC (5 HK): Bought back 4.17mln shares at average 661.28 pence each on February 23.
  • Imperial Pacific (1076 HK): Says shareholder to fund Saipan casino needs.
  • North China Pharma (600812 CH): China probes ex-North China Pharma Group chairman for violations.
  • Nine Dragons Paper (2689 HK): H1 net profit soared to 1.9bn yuan, compared to just 312mln a year ago.
  • PICC (1339 HK): President Wang Yincheng under China probe for violations.
  • Shanghai Electric Power (600021 CH): Says Yangtze Power cut holding to 4.97%.
  • Shun Tak Holdings (242 HK): Gets 1.5bn yuan five-year loan for Hengqin project.
  • Tianqi Lithium (002466 CH): Prelim. FY net 1.57bn yuan versus 247.9mln yuan year ago.

Japan analyst views

  • Credit Saison (8253): Cut to neutral from outperform at Macquarie.
  • Central Glass (4044), Nippon Electric Glass (5214): Cut to underperform from neutral at Mizuho.
  • Happinet (7552): Rated new outperform at Tokai Tokyo.
  • Iida Group (3291): Raised to buy from hold at Mitsubishi UFJ Morgan Stanley.
  • Meiji (2269): Raised to buy from neutral at Okasan Securities.
  • Mitsui & Co (8031): Raised to overweight from neutral at JPMorgan.
  • Next (2120): Raised to buy from hold at Mitsubishi UFJ Morgan Stanley.
  • Tokyo Tatemono (8804): Cut to neutral from buy at Haitong.
  • TS Tech (7313): Raised to neutral from sell at Ichiyoshi Research.
  • Yokohama Reito (2874): Rated new outperform at Daiwa with PT of ¥1,250.

Japan stocks

  • Ajis (4659): To conduct 2-for-1 stock split on April 1.
  • AltPlus (3672): Seeks about 2b yen from sale of equity warrants to Macquarie.
  • Nihon Unisys (8056): To buy back up to 7.4% of shares via auction.
  • Takata (7312): To book 5b yen gain on sale of operations to TransDigm.
  • Tepco (9501): Says smoke was reported coming out of a service building at its Kashiwazaki-Kariwa nuclear plant in Niigata prefecture earlier Thursday

Australia analyst views

  • APN News (APN): Raised to buy at UBS, PT $A3.30.
  • Asaleo Care (AHY): Raised to outperform at Credit Suisse, PT $A1.75.
  • BHP Billiton (BHP): Cut to hold at SBG; PT lowered to 1,560p.
  • Cleanaway (CWY): Cut to neutral at Macquarie, PT $A1.14; Raised to add at Morgans Financial, PT $A1.22; Cut to neutral at UBS, PT $A1.16.
  • Crown Resorts (CWN): Raised to neutral at Macquarie, PT $A12.76; Cut to neutral at Credit Suisse, PT $A13.
  • Flight Centre (FLT): Raised to outperform at Credit Suisse, PT $A34.90; Raised to outperform at Credit Suisse, PT $A34.90.
  • Isentia (ISD): Cut to sell at Shaw and Partners, PT $A1.50.
  • McGrath (MEA): Raised to buy at Bell Potter, PT $A0.80.
  • McMillan Shakespeare (MMS): Cut to hold vs buy at Morningstar.
  • OZ Minerals (OZL): Cut to sell vs hold at Wilsons.
  • Perpetual (PPT): Cut to hold at Bell Potter, PT $A55; cut to hold at Shaw and Partners, PT $A53.
  • Southern Cross Media (SXL): Cut to neutral at Credit Suisse, PT $A1.40.
  • Tassal Group (TGR): Raised to outperform at Credit Suisse, PT $A5.20.

Australia stocks

  • Trading ex-div.: Amcor, Computershare, Evolution Mining.
  • ANZ Bank (ANZ), Commonwealth Bank (CBA), National Australia Bank (NAB), Westpac (WBC): Australia lenders risk heavy hit if Fed hurries with rate hikes.
  • Automotive Holdings (AHG): H1 results expected; NOTE 2-analyst adj. net income est. $A42.6mln.
  • Bellamy’s (BAL): To ‘vigorously defend’ shareholder suit.
  • Charter Hall Group (CHC): H1 results expected; NOTE: 2-analyst rev. est. $A96.3mln.
  • Coca-Cola Amatil (CCL): Set to embark on ‘transformational’ purchase: Australian.
  • Corporate Travel Mgmt (CTD): H1 results expected; NOTE: Co. in December forecast FY17 underlying Ebitda $A92mln-$A97mln.
  • Cromwell Property (CMW): H1 results expected; NOTE: 2-analyst adj. net income est. $A73.4mln.
  • Mayne Pharma (MYX): H1 results expected; NOTE: Co. in November forecast significant FY17 growth on acqusitions.
  • MYOB (MYO): Majority holder Bain places 16.5% stake at $A3.55/share vs Feb. 23 close $A3.69; Raised to neutral at Credit Suisse, PT $A3.50.
  • NextDC (NXT): H1 results expected.
  • OceanaGold (OGC): Says FY net more than double at record of $136.5mln.
  • Platinum Asset Mgmt (PTM): H1 Revenue, profit drop as FUM declines.
  • Reece (REH): H1 net up 6.9% to $A96.1mln.
  • Regis Healthcare (REG): H1 results expected; NOTE: Co. in August forecast FY17 Ebitda at least 15% above normalised FY16.
  • Super Retail (SUL): H1 results expected; NOTE: Rev. est. $A1.29b (3 analysts).
  • Wesfarmers (WES): KKR may be among PE firms considering buying office supply operators in Australia, including Officeworks: AFR; NOTE: Feb. 15: Wesfarmers Explores Officeworks IPO; Coles H1 Profit Drops.
  • Westfield (WFD): Intu gains after results and Westfield raises stake in co.

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  The Trump administration is sending mixed signals on whether it views authorities in Beijing, above, as currency manipulators. 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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