Article / 10 October 2016 at 1:19 GMT

Morning Report APAC: Market awaits Trump-Clinton debate

APAC Sales Trading Desk / Saxo Capital Markets
Singapore






 

  • Asian stock markets opened mixed as investors awaited the US presidential debate
  • The nonfarm payrolls was lower than expected on Friday at 156,000
  • The USD was sold off after the NFP numbers
  • Attention is focused on the second US presidential debate

 By Saxo APAC Sales Trading


Economic data of the day (Singapore Time; GMT+8)

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Overnight news

United States

  • Nonfarm payrolls rose below expectations 156,000 (Exp. 172,000) from an upwardly revised 167,000 (Prev. 151,000) in August and a downwardly revised 252,000 in July (Prev. 275k). Professional and business services added 67,000. Healthcare jobs increased 33,000. Food service jobs grew 30,000. Retailers added 22,000. Employment in the mining sector was flat. Manufacturing employment fell 13,000. 
  • The unemployment rate went up to 5.0% (Exp. 4.9%). Private-sector worker wages rose $0.06, or 0.2% MoM (Mkt est: up 0.3%), to $25.79 an hour. Wages grew 2.6% YoY (Mkt est: up 2.6%). The average work-week last month increased a tenth of an hour to 34.4 hours.
  • Inventories declined 0.2% (Mkt est: minus 0.1%) from the advance economic indicator estimate of minus 0.1%. The component of wholesale inventories that is used in the calculation of GDP – wholesale stocks excluding autos – dropped 0.3%.  

Foreign exchange

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  • The USD sold off after the lower-than-expected NFP numbers. The main mover was USDJPY which dropped almost 1% and back below the 100d MA. We are still above the downtrend channel and we will find good support ahead of 102.50.
  • The low in the GBP has been set at 1.1500 on Friday following the flash crash which lasted two minutes at 0707 Singapore time. The market is still shaky and the short-term support should be at 1.2300.
  • In Emerging Markets, USDCNH continues to move up. After dropping following the NFP numbers, it rallied back at the end of the day to settle above 6.7000. Locals have been seen selling 1-year forward points during New York time. The loss of support to Donald Trump by important Republican members over the weekend helped USDMXN drop significantly in early Asia to a level below 19.0000. This morning is the second Trump-Clinton debate that will be important for the next MXN move.

Foreign exchange volatilities

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  • USDJPY saw some downside buyers after the NFP number
  • The GBP volatilities dropped after the flash crash of Friday but are finding good support by gama players


Rates
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  • The UST curve bull flattened with 10-year yield logging its largest one-week rise since mid-July, yet unable to breach 1.75%; 2-year yield halted around 0.85% August high
  • The market is only pricing a 64.3% chance of hike in December following the NFP number
  • The peripherals rates continue to rise and wait to see of the European Central Bank will bring new stimulus measures


Commodities 

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Equities

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  • US stocks declined last Friday to register their first losing week in four, as the crashed British pound raised investors' concerns and September nonfarm payrolls report didn't manage to bring back the confidence. The S&P 500 index slipped 7.03 points to 2,153.74 with materials (down 1.8%) leading the way in losses.
  • Honeywell International dropped 7.5% after it lowered its FY guidance due to an unexpectedly weak September, which was caused by weak sales in aftermarket services for business-jet engines and hand-held scanners for shippers and logistics.
  • Recreational vehicle retailer Camping World Holdings rose 2.3% in their trading debut. It raised about $250mln through its IPO. The stock traded as high as $24.35, above the IPO price of $22.
  • European stocks retreated amid risk aversion caused by the crash in the value of the pound sterling. The European Stoxx 600 index dropped 0.9% to 339.64. However In London the FTSE 100 climbed 0.6% to 7,044.39, with miners and multinationals being the biggest winners.
  • Deutsche Bank edged up 0.5% after sources said the largest stake owner Qatari investors indicated that they do not plan to sell their shares. Even more, it could consider raising their stake to 25% if Deutsche decides to raise capital.
  • RWE tanked 7.4% after spinout Innogy, which debuted on the stock market, had been struggling to trade above its issue price.


Asia-Pacific stocks

Hong Kong

 Analyst ratings

- AgBank (1288 HK): Cut to neutral at JPMorgan

Preview

- Developers: Shanghai, other local governments enact curbs on property market; HK existing home prices rise 2.49% on week: Centaline
- Leisure: China’s retail, catering sales during holiday rise 10.7% y/y
- Tech: President Xi says China to accelerate internet technology innovation: Xinhua
- Tourism: China’s passenger trips during holiday rise 2.7% y/y
- China United Network Communications (600050 CH): Says parent studying mixed-ownership reform plan
- Shenzhen Special Economic Zone Real Estate (000029 CH): China Evergrande

 Japan

 Analyst ratings

- ABC-Mart (2670 JP): Cut to neutral at Daiwa
- Daiseki Eco (1712 JP): Downgraded to neutral at Tokai Tokyo
- Denka (4061 JP): Cut to neutral at Mitsubishi UFJ-MS
- Musashi Seimitsu (7220 JP): Rated new buy at Ichiyoshi
- Seven & i (3382 JP): Cut to neutral at Goldman
- Star Micronics (7718 JP): Cut to neutral plus at Iwai Cosmo
- Takara Bio (4974 JP): Cut to neutral at Nomura

Preview

- Astellas (4503 JP): Transplant rejection treatment granted orphan drug status by FDA
- DeNA (2432 JP): To sell ‘DeNA Shopping,’ ‘au Shopping Mall’ to KDDI
- McDonald’s Japan (2702 JP): Sept. same-store sales up 11.5%
- Nagaileben (7447 JP): Full-year oper. profit 4.95bn yen vs 4.81bn yen co. forecast; targets 5.11bn yen for current FY
- Nomura Co. (9716 JP): Raises planned full-year dividend to 38 yen/share from 34 yen
- OSG (6136 JP): Reports 9-month results; 3Q oper. profit -18% to 4.63bn yen
- Pasona (2168 JP): 1Q oper. profit -39% to 215mln yen
- Pocket Card (8519 JP): 1H parent net income 985mln yen vs co. forecast 900mln yen
- Seven & i (3382 JP), H2O Retailing (8242 JP): Forming capital tie-up; Seven and i will close two department stores, transfer Kansai area dept stores to H2O; Seven and i earnings in line with prelim. figures released last week

Australia

 Analyst ratings

- Estia Health (EHE AU) cut to hold vs buy at Shaw & Partners
- Bank of Queensland (BOQ AU) cut to sell vs neutral at UBS
- Magellan Financial (MFG AU) raised to outperform from neutral at Credit Suisse
- QBE (QBE AU) cut to hold from buy at Bell Potter

Preview

- BHP Billiton (BHP AU) says some work has recommenced at Olympic Dam mine, after South Australian storms caused power outage

Source: CIMB / Bloomberg


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 Tough road ahead ... revelations from US presidential candidate Donald Trump's
recordings will make for a heated second debate today. Photo: iStock

 
– Edited by Gayle Bryant

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