Morning Report APAC: Market rallies on Japan PM's stimulus plans
- The S&P 500 closed at a record high on hopes the earnings recession is ending
- USDJPY rallied more than 1% on news the Prime Minister plans to add stimulus
- The CAD is the commodity currency suffering the most; USDCAD broke 1.3100
- The FTSE 100 closed above the 6600 level for the first time since last August
By Saxo APAC Sales Trading
Economic data of the day (Singapore Time: GMT + 8 hours)
- 0900: PHP – Exports YoY (Exp. -2.4%, Prev. -4.1%)
- 12:00: MYR – Industrial Production YoY (Exp. 2.5%, Prev. 3.0%)
- 1400: EUR – Germany CPI MoM (Exp. 0.1%, Prev. 0.1%), YoY (Exp. 0.3%, Prev. 0.3%)
- 2000: INR – CPI YoY (Exp. 5.79%, Prev. 5.76%), Ind. Prod. (Exp. -0.4%, Prev. -0.8%)
- 2200: USD – Wholesale Inventories May (Exp. -0.4%, Prev. 1.0%)
- 1100: AUD – RBA's Luci Ellis Gives Speech in Sydney
- 1700: GBP – Mark Carney Speaks on Financial Stability in Parliament in London
- 2115: USD – Fed's Daniel Tarullo Speaks in Washington
- 2135: USD – Fed's James Bullard Speaks in St. Louis
Theresa May will become the next UK Prime Minister, replacing David Cameron, following the withdrawal from the race of Andrea Leadsom. Theresa May was in the "Remain" camp. She will take the office on Wednesday. She said she will not invoke the Article 50 EU exit clause this year.
Federal Reserve speech
Kansas City Federal Reserve President Esther George said US interest rates are too low and she wants the Federal Open Market Committee to get back to raising short-term interest rates gradually to reflect progress on hiring and inflation. George views the current level of short-term rates as “too low given the progress we’ve seen in the economy” and that "keeping rates too low can create risks". “Gradual adjustments” in short-term interest rates mean the central bank is more likely to achieve its growth and inflation goals.
USDJPY rallied more than 1% after Prime Minister Shinzo Abe said he is planning to add fiscal stimulus following the ruling party’s victory in Sunday’s upper-house elections. He will order measures to support domestic demand, including plans to speed up the construction of high-speed trains. USDJPY was also helped by the positive speech from Fed’s George Osborne on rates and the new Prime Minister announced in the UK. The short-term resistance is at 103.50/103.70 for the pair.
GBPUSD is finding some good support at the 1.3000 level and the market took positively from the nomination of Theresa May as the next Prime Minister of the UK.
The NZD came off 1% since the post-NFP rally driven partially by buying interest in AUDNZD after the failure to confirm the break at 1.0400
The CAD is the commodity currency suffering the most and USDCAD broke 1.3100 and the 100d MA on the back of lower oil. The next target for the pair is now the 200d MA at 1.3313.
Foreign exchange movements
The S&P 500 closed at a fresh, record high on the back of hope that the earnings recession is coming to an end. The S&P 500 climbed 7.26 points, or 0.3%, to 2,137.16. The Dow Jones Industrial Average gained 80.19 points, or 0.4%, to 18,226.93. The Nasdaq rose 31.88 points, or 0.6%, to 4,988.64.
The FTSEurofirst 300 index jumped 19.47 points, or 1.5%, to 1,315.49 as European stocks rose for a third successive session after Theresa May, leader of the conservative party won the race to succeed David Cameron as UK Prime Minister and as investors welcomed the possibility of further central bank stimulus.
May, the Home Secretary since 2010 will be taking over from Cameron formally on Wednesday. The FTSE 100 also jumped 92.22 to 6682.86, closing above the 6600 level for the first time since last August as the market somehow had erased its concerns on the Brexit fear.
Wynn Resorts climbed 5% before closing at $94.10 after investors looked favourably on how well the Asian gaming capital of Macau is performing to start the month of July. Reports showed that gross gaming revenues in Macau for the first 10 days of the month appear to have risen by more than 8% compared to last year, and that could signal that Macau's long decline could finally have come to an end.
Alcoa closed at $10.14, up 3.2% and also released a better-than-expected result after market close as earnings came in 15 cents a share, much higher than the 9 cents expected and reaffirms its automotive global production growth forecast. Alcoa closed at $10.14; its shares jumped more than 4% in the after-hours trading.
In Germany, Steelmakers rallied on signs of sector consolidation. Germany’s ThyssenKrupp is up 6.4% and confirmed it was in talks with India's Tata Steel and other steel groups over a much-craved potential tie-up.
- BYD (1211 HK): Raised to buy at Daiwa
- China Jinmao (817 HK): Cut to neutral at Credit Suisse
- China Merchants Hlds (144 HK): Cut to reduce at HSBC
- Man Wah (1999 HK): Cut to hold at Daiwa
- Greentown Service Group (2869 HK) trading debut
- China Leon Inspection Holding (1586 HK) trading debut
- Chow Tai Fook (1929) first financial quarter same store sales of mainland China, Hong Kong & Macau -17% and -20% YoY, expects 2Q sales to record negative growth
- China Telecom (728) plans to start 5G service in 2020 (Daily); former chairman Chang is expelled from Party and might face prosecution for violations
- CR Land (1109) June contracted sales +54% YoY to RMB12.7bn
- China Res Power (836) June total net generation of subsidiary power plants -2.6%YoY to 12.01m MWh
- Yue Yuen (551) June consolidated operating revenue +0.27% YoY to $754mln
- China Coal (1898) issued positive profit alert, expects interim profit to swing from loss last year to up to RMB520mln
- Shimao Ppty (813) bought back three million shares at HK$10.26-10.46/share today for a total of HK$31.2mln
- Poly Ppty (119) Jan-June contracted sales +17.24% YoY to RMB17.0bn
- CGS ( 6881) June profit -60.9% YoY to RMB 559.4mln
- GOME (493) bought back 97mln shares on market for HK$95mln on Monday
- Datang Renew(1798) Q2 power generation +4.36% YoY to 3.3m MWh
- Datang Intl (991) to provide RMB1.2bn entrusted loan to two subsidiaries
- CK Ppty (1113)’s residential property "La Mansion' in Yuen Long, has cashed in about HK$197mln, will hike price by 3% on the remaining four unsold houses on the price list with effect from July 25
- Carnival Group (996) issued profit warning, expects to record HK$100.5mln 1H loss
- Heiwa Real Estate (8803 JP): Rated new buy at Mitsubishi UFJ Morgan Stanley
- MonotaRO (3064 JP): Downgraded to sell from hold at Cantor Fitzgerald
- NEC (6701 JP): Raised to buy at Citi
- Pressance (3254 JP): Rated new buy at Mitsubishi UFJ Morgan Stanley
- Suzuki Motor (7269 JP): Added to conviction buy list at Goldman
- Token (1766 JP): Rated new hold at Mitsubishi UFJ Morgan Stanley
- Ci:z Holdings (4924 JP): J&J’s Cilag to take up to 19.9% stake in company
- Cosmos Pharma (3349 JP): Full-year operating profit ¥18.6bn vs company forecast ¥17.4bn, forecasts ¥18.7bn for current FY
- Create SD (3148 JP): Full-year operating profit in line with company guidance, forecasts 5.3% gain to ¥14.7bn for current FY
- Izumi (8273 JP): Q1 operating profit -3.8% to ¥7.78bn
- Lawson (2651 JP): Q1 operating profit -8.8% to ¥17.5bn
- Mitsubishi Heavy (7011 JP): Said to win order for 20 jets from Rockton
- Nichi-Iko Pharma (4541 JP): Offers to buy Sagent for $21.75/share, 40% premium to latest close
- Ryosan (8140 JP): To buy back up to 9.52% of shares for as much as ¥10.5bn; will pay special dividend of ¥50 or more, raising planned full-year payout to at least ¥140/share
- Sakata Seed (1377 JP): Full-year operating profit ¥7.32bn vs company forecast ¥6bn, forecasts -18% to ¥6bn for current FY
- Takeuchi Mfg (6432 JP): Q1 operating profit +6.5% to ¥4.85bn
- SG Fleet Group Ltd (SGF AU) cut to hold vs buy at Bell Potter
- Altium Ltd (ALU AU) cut to sell vs hold at Bell Potter
- Investore Property (IPL@NZ) begins trading on NZX after demerger from Stride
- Energy Resources of Australia (ERA@AU) Q2 operating review due
Source: CIMB / Bloomberg
Markets reacted well to the Japan PM's plans to add fiscal stimulus following the ruling party’s victory in Sunday’s upper-house elections. USDJPY rallied more than 1%. Photo: iStock
– Edited by Gayle Bryant
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.
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.
Samsung Hub | 3 Church Street | # 30-01 | Singapore 049483
Company No. 200601141M