Morning Report APAC: Asian markets wait on Chinese data
- Asian markets are waiting on Chinese data, including third-quarter GDP
- Netflix closed up 19% on a larger-than-expected increase in new additions
- US inflation came in broadly in line with expectations
- The USD was in a choppy mixed range yesterday with no real direction
By Saxo APAC Sales Trading
Economic data of the day (Singapore Time; GMT+8)
- 2045 - USD - Federal Reserve's John Williams speaks in New Jersey
- - 21:15 - GBP - UK Chancellor Philip Hammond testifies to the Treasury committee
- - 23:15 - CAD - Bank of Canada’s Stephen Poloz holds a press conference post the BoC decision due today
US inflation came in broadly in line with expectations showing a reasonably robust inflation picture with headline at a 23-month high at 1.5% and core printing at 2.2%, slightly below expectations.
Inflation data in the UK showed a greater-than-expected increase as base effects of the weaker GBP appear to be showing. The strong set of data yesterday will create much debate as to the Bank of England's next move. The Brexit shock has not, as yet, reflected itself in much weaker economic data in part because of the GBP move acting as a shock absorber. The question the BoE now faces is whether to ease further, throwing the GBP further under the bus and risking inflation overshooting.
- The USD was in a choppy mixed range yesterday with no real direction and divergent performance against the crosses. Positioning continues to be trimmed and levels sought to re-establish longs.
- The EUR initially traded firm in Asia yesterday before losing momentum on the release of the US CPI data.
- Emerging Markets currencies continued to rebound with all currencies performing. Is this a sustained bounce in EM or just a pull back? Personally we think the latter.
Foreign exchange volatilities
- Generally volatilities continue to soften and gamma declines
- Interest in EURUSD downside has increased. As we have mentioned previously, the best expression of USD strength in our opinion is EUR weakness. The market is seemingly in agreement as downside as the increase in positions looking at 1.09 and below has picked up.
- US Treasury prices rose on Tuesday, driving yields lower, after September core CPI data disappointed.
- The yield on the 30-year bond slipped 1.1 basis points to 2.511%, while the 10-year Treasury declined by 1.8 basis points to 1.748%.
- The UK’s 10-year gilt rose as high as 1.136%, after CPI data outstripped expectations, however the move eventually faded and retreated back to around 1%
- US stocks closed higher as stronger-than-expected quarterly results from a roster of companies brought confidence broadly. The S&P 500 index finished up 13.10 points to 2,139.60, with all main sectors in green.
- Goldman Sachs shares closed up 2.2% after the investment bank reported a strong rebound with quarterly earnings rising 47%, thanks to a rebound in trading revenues.
- Netflix surged and closed up 19% after results blew past Wall Street expectations with a larger-than-expected increase in new additions. The streaming company’s shares recorded their largest daily increase since July 31, 2015.
- A broad-based rally pushed European stocks to the biggest advance in almost a month on optimism monetary policy will remain supportive of growth. The Stoxx Europe 600 Index added 1.5% at the close. The FTSE 100 popped up 0.8% to close at 7,000.06.
- Burberry Group tumbled 7.2% after its wholesale revenue declined more than expected in the first half of the year.
- Charter Hall Long Wale REIT (CLW AU) trading debut expected after selling 280.2mln shares at $A4 each
- New Zealand King Salmon Investments (NZK NZ) trading debut expected after selling 69.23mln shares at $NZ1.12 each
Greater China highlights
- Beijing Kunlun Tech (300418 CH): LendInvest buys back stake from Beijing Kunlun: Financial Times
- China Mobile (941 HK): China Mobile H.K., Huawei H.K. in pact for LTE network
- TCL Corp. (000100 CH): To invest $100mln in Argentina over 12 months
- Astellas (4503 JP): FDA modifiesindication for Tarceva for NSCLC
- DIC (4631 JP): Jan-Sept. oper. profit seen up 8% y/y: Nikkei
- Mitsui & Co. (8031 JP): To buy stake in Indonesian online retailer: Nikkei
South-east Asia highlights
- MNC Investama (BHIT IJ): To offer 1.45bn of new shares on Oct. 25
- M1 (M1 SP): Q3 net $S34.4 vs $S44.9mln
- Siam Commercial (SCB TB): Q3 net 11.53bn baht; analyst est. 12.4bn baht
– 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.
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