Article / 07 December 2017 at 1:51 GMT

Morning Report APAC: Nikkei 225 rebound leads the way in stock revival

APAC Sales Trading Desk / Saxo Capital Markets
Singapore

 

  • Fonterra lowered its 2018 milk price forecasts, taking the shine off the NZ dollar
  • Oil fell on news of high petrol inventories, lower than expected crude drawdowns
  • European stocks headed into negative territory before rebounding

By Saxo APAC Sales Trading

Economic data of the day (Singapore Time)

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Speeches (Singapore Time)

  • (Time to be determined) – China: People's Bank of China deputy governor Pan Gongsheng to speak in Beijing.
  • (2400) – EU: European Central Bank president Mario Draghi holds press conference as chair of the Group of Governors and Heads of Supervision, Bank for International Settlements, in Frankfurt.


Overnight news, US

  • A relatively muted US session with a risk off feel. Stocks ended near flat with the Nasdaq putting in small gains.
  • An EIA report showing increased stockpiles saw the energy complex fall heavily on an otherwise quiet day.
  • US ADP numbers came in in line with expectations at 190,000.
  • Donald Trump said it’s time to recognise Jerusalem as Israel’s capital. This breaks with seven decades of policy on the region and has been met with a harsh response from leaders in the Muslim world.
  • The UN security council is to meet on Friday to discuss the Israel developments.

Overnight news, Europe

  • European stocks started the session deeply in negative territory before rebounding.
  • German factory orders moderated on the month from the very strong numbers previously. Still putting in a handsome 6.9% y/y growth.
  • Continued resistance to Theresa May’s Brexit plan from the Democratic Union Party in Northern Ireland has put the entire process at risk, as she scrambles to meet the EU summit deadline on December 14.

 

Foreign exchange

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  • US dollar: there was general USD strength on a quiet day as most currencies lost ground despite lower US Treasuries yields.
  • NOK and SEK: After a brief rest bite from the selling the previous day, the Scandinavian currencies resumed their selloff, leaving them the worst of the G10 performers.
  • NZ dollar: Fonterra lowered its 2018 milk price forecasts and growth forecasts. This took a little bit of shine out of the NZ dollar.
  • Emerging Markets: EM currencies were mostly weaker yesterdays as USD strength weighed on the EM complex. The big energy producers like Russia fared worst with the RUB down 0.8% on the day on Wednesday.
 


Foreign exchange movements
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  • AUD vols were bid yesterday after the GBP miss with the market short downside gamma below 0.7550. So a break here could translate into a further squeeze in vols.
  • GPB vol remains bid as the ongoing Brexit news fails to stem vol nerves.
  • Euro: ECB data due out on 14 December 14, which coincides with the EU summit, has seen vols bid around that calendar event. 


Rates

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  • US yields were a bit lower across the curve amid minor ‘risk off’ sentiment felt in the market.
  • Core European bonds were also higher, despite weak demand for bunds auction.


Commodities 

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US equities

  • We have yet another acquisition in the medical space as Davita rose 13.57% on news that  United Health Group Inc will buy DaVita Inc's primary and urgent care services for $4.9 billion. Aetna was bought by CVS over the weekend last week.
  • Madrigal Pharmaceuticals rocketed 88% by day close after the company announced positive mid-stage results for its experimental non-alcoholic steatohepatitis drug. Studies shown that patients treated with the drug

European equities

  • In Europe, Steinhoff closed 63% lower after the company launched an accounting irregularities investigation. The CEO has resigned.
  • Saga, an insurance company, plunged 21% on profits warning as it commented that profits in the current financial year would grow more slowly than anticipated.

Hong Kong equities

  • The Hang Seng plummeted 618 points or 2.14% and recorded its biggest loss for the year as Tencent slid heavily and and weighed on the index.

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 Wheat fell sharply on oversupply concerns as Canada’s 2017 output topped expectations; the stronger USD may curb the appeal of US grains. Photo: Shutterstock

 

– Edited by Robert Ryan


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