Article / 08 July 2016 at 2:17 GMT

Morning Report APAC: Asian shares steady on payrolls optimism

APAC Sales Trading Desk / Saxo Capital Markets


  • Crude still at a two-month low in early Asian trading
  • Gold falls overnight, but still in its sixth straight weekly climb
  • In the US, initial claims for unemployment benefits fell by 16,000
  • UK industrial production shrinks by 0.5% in May
  • US employers 'probably' added 180,000 to nonfarm payrolls - Bloomberg

By Saxo APAC Sales Trading

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

-      1400: EUR – Germany  Trade Balance (Exp. 23.5B, Prev. 25.7B)
-      1400: EUR – Germany Current  Account Balance (Exp. 24.6B, Prev. 28.8B)
-      1400: EUR – Germany Exports MoM (Exp. 0.4%, Prev. 0.1%), Imports MoM (Exp. 0.7%, Prev. -0.3%)
-      1600: TWD – Taiwan Imp. YoY (Exp. -3.5%, Prev. -3.4%), Exp. YoY (Exp. -3.1%, Prev. -9.6%)
-      1600: TWD – Taiwan Trade Balance (Exp. 2.00B, Prev. 3.50B)
-      2030: CAD – Unemployment Rate (Exp. 7.0%, Prev. 6.9%)
-      2030: CAD – Net change in Employment (Exp. 5.0k, Prev. 13.8k)
-      2030: USD – Change in Nonfarm Payrolls (Exp. 180k, Prev. 38k)
-      2030: USD – Unemployment Rate (Exp. 4.8%, Prev. 4.7%)


No speeches

Overnight News

US: Initial claims for unemployment benefits fell by 16,000 last week to a nearly three-month low of 254,000, showing no evidence of rising layoffs ahead of the key US jobs report for June. The average of new jobless claims over the past month slid 2,500 to 264,750.

UK: UK industrial production shrank -0.5% in May, bringing to an end a two-month boom in the sector fueled by a revival in manufacturing. But less than expected (-1.0%).

Industrial production is almost certain to contribute to economic growth in the second quarter for the first time since the summer of last year. Output will expand if June sees a decline of less than 6%, a drop not seen since 1979.

But the British economy is only starting to feel the impact of last month’s shock vote to leave the European Union, which is casting doubt on prospects for the rest of the year.

Foreign exchange



With oil struggling to break the $50 level, USDCAD is finding very good support below 1.3000 and is on the verge of breaking the 100 Day Moving Average at 1.2998.

Saxo's FX strategist John Hardy is predicting that USDCAD will test soon the 200 DMA at 1.3312. This pair has been out of the radar of investors now so there is a possibility to see this break higher if oil continues to struggle.

The Reserve Bank of New Zealand's deputy governor’s speech didn’t outline new macro-prudential measures; Spencer said tighter housing market rules could be considered, rate cuts could pose financial stability risk and NZD rallied following these comments.

On the other hand AUDUSD dropped after S&P cut the country AAA rating outlook to negative from stable making AUDNZD the biggest mover of the day, down 2% and breaking the strong support of 1.0400. The market being long this cross in general, we could see more stops coming lower.

Foreign exchange movements


Funds are interested in buying downside GBP for the Bank of England meeting next Thursday. The market is long EUR gamma and has been selling some back ahead of the weekend.



US 10 Year Treasury yields initially rose from 1.36% to 1.42%, partly helped by some encouraging US labour data, but retraced to 1.37% as oil slid.

The yield level is still hovering near record lows, with risk-off mood spreading all over the world, and is also due to Brexit brought expectation of government easing and delayed Fed rate hike.

10-year yields in the UK maintained near record lows and closed at 0.781%. Similarly, German 10-year yields and peripheral countries also traded trading at record lows, awaiting US Labor Department releasing its June payroll figures. 






US stocks opened higher, but soon surrendered their gains as oil futures plunged near two-month lows after crude stockpiles fell slightly less than forecast.

Among the blue chips, the worst performers were Verizon Communications (VZ: -1.56%), Chevron (CVX: -1.46%) and Exxon Mobil (-1.20%). PepsiCo rose 1.48% after reporting better-than-expected earnings for its second quarter.

European stocks climbed and broke a three-session losing streak. Among top gainers, Primark owner Associated British Foods surged 8.9% after the company upgraded its annual earnings outlook to a profit, reversing a previous forecast for a marginal decline.

In addition, Danone sprang up 1.9% after the French dairy maker said it is buying US organic foods producer WhiteWave Foods Co. (+18.55%) for about $10 billion.

Shares of healthcare company Humana (-9.58%) were on track to fall the most in nearly four years after reports indicated that regulators harboured concerns about its $37 billion merger with Aetna ( -3.97%).

Shares of SemiLEDS (+212.31%) soared after the LED chips maker late Wednesday said Peter Chiou will buy 577,000 shares of the company’s common stock at $5.00 per share.

Asia Pacific Stocks

Hong Kong

Analyst ratings

-       USTC Sinovate (300520 CH) trading debut


-       Alibaba Health (241 HK): Expands into new consumer business
-       BYD (1211 HK): Unit wins bids valued at about 2b yuan
-       Changan (200625 CH): In talks with Tamil Nadu govt on plant: ET
-       FIH Mobile (2038 HK): Unit to buy Microsoft Mobile Vietnam for VND492.2b
-       Future Land (1030 HK): Wins 823.4 mln did for land parcel in China
-       McDonald’s said to narrow bidders for $2b China franchise

Analyst ratings

-      Credit Suisse rates Yahoo Japan to outperform
-      Credit Suisse puts Recruit and Rakutwen as neutral
-       Digital Garage (4819 JP): Cut to neutral from buy at Ichiyoshi Research
-       Hoshizaki (6465 JP): Cut to neutral at Goldman
-       Shiseido (4911 JP): Raised to neutral from underperform at Credit Suisse
-       Tokyo Electron (8035 JP): Raised to outperform from neutral at SMBC Nikko Securities
-       Unicharm (8113 JP): Cut to underperform from neutral at Credit Suisse
-       Yamato (9064 JP): Raised to overweight from underweight at Mitsubishi UFJ Morgan Stanley
-       Yonex (7906 JP): Raised to buy at Goldman


-       Dentsu (4324 JP): June parent sales +10.8% y/y
-       Japan Hotel REIT (8985 JP): Seeks to raise 35.5b yen in public share sale
-       Nomura Co. (9716 JP): 1Q oper. profit +7% to 2.39b yen
-       OSG (6136 JP): 1H oper. profit 9.84b yen vs co. forecast 10.6b yen; cuts full-year forecast 22% to 18b yen
-       Seven & i (3382 JP): 1Q oper. profit 81.5b yen vs est. 84.2b yen (3 analysts)
-       United Super Markets (3222 JP): 1Q oper. profit +3.2% to 3.64b yen


Analyst ratings

-       CIMIC (CIM): Raised to neutral from sell at Morningstar
-       Insurance Australia (IAG): Cut to equalweight from overweight at Morgan Stanley
-       Woodside Petroleum (WPL AU): Upgraded to buy from neutral at UBS

-       Hochtief, ACS Fall After Cimic Drops ~17% Overnight in Australia
-       South32 (S32): “Best option” to get silver rally exposure, Bernstein says
-       Tabcorp Falls on Greyhound Racing Ban in New South Wales

Sources: CIMB / Bloomberg
 The Japanese market is betting on a strong US employment report. Photo: Flickr

– Edited by Adam Courtenay

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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