Article / 08 September 2016 at 3:10 GMT

Morning Report APAC: Oil extends gain, stocks flat pre-ECB decision

APAC Sales Trading Desk / Saxo Capital Markets


  • Oil rose on reduced inventory data from EIA
  • US JOLTS report showed robust labour market growth
  • US Beige Book showed modest economic growth and slight inflation pressure
  • USD found firmer footing, CAD rallied, GBP sold off 
  • Probability of rate cut at Thursday's ECB meeting about 10.6% 


By Saxo APAC Sales Trading

Economic data of the day (Singapore Time)



1230: JPY – Bank of Japan's Hiroshi Nakaso makes a speech at ACCJ in Tokyo

20:30: EUR – ECB President Mario Draghi holds a press conference

Overnight news

US:  US Jolts report showed robust labour market growth, which should please the US Federal Reserve. The much-watched quits rate remained stable at 2.1% for the month. 

US Beige Book overnight showed modest economic growth, slight inflation pressures and tight labour markets, a carbon copy of the month before. 

Canada:  Bank of Canada surprised with a dovish statement today, noting that the risk to inflation has tilted to the downside since July and that financial vulnerabilities associated with household imbalances remain elevated. It did suggest growth was expected to pick up, however the market took the statement as dovish and CAD sold off. 

Europe: German industrial production unexpectedly declined by 1.2% y/y, versus an expected increase of 0.2%. 

UK: UK industrial production beat expectations, 2.1% vs 1.9%, but manufacturing production missed at 0.8% vs 1.7% expected y/y. 

Mark Carney spoke in front of the Treasury select committee yesterday, with the only highlight being his comment that the Bank of England could cut rates further as well as expand term funding scheme, if needed.

Foreign exchange



USD found firmer footing after the Asian trading session. CAD rallied from 1.2823 to a high of 1.2914 post the dovish Bank of Canada statement. GBP sold off post Carney’s meeting with the Treasury select committee.

Emerging Markets traded on firm footing throughout the Asian session with KRW trading to its strongest level since May 2015. However, as the USD stabilised, the weaker of the EM complex began to sell off (ZAR, TRY, MYR).

Foreign exchange movements


Volatilities opened bid through the Asian session, but sold off in the afternoon as the USD found firmer footing.  



US Treasury prices were little changed as investors stayed on the sidelines. Markets have pushed back expectations of the next Fed rate rise, and attention has focused on the European Central Bank meeting.

The 10-year bund yield dropped to a month low of -0.127%, while Spanish 10-year yields also touched 0.912% ahead of Thursday’s ECB meeting, at which the market is pricing the probability of a rate cut of only about 10.6%.  








The S&P 500 and Dow lost a little ground, while the Nasdaq Composite closed at a record high as tech stocks rallied, lifted in part by Apple Inc. which rose 0.6% after unveiling the iPhone 7 at its flagship product event in San Francisco.

Chipotle Mexican Grill Inc. jumped 5.9% after Bill Ackman’s Pershing Square Capital Management LP late on Tuesday disclosed it has bought a 9.9% stake in the fast-food chain. 

Germany’s DAX 30 index struggled to hold out a gain of 0.2% after German industrial production fell 1.5% in July, as manufacturing output declined. 

Volkswagen AG rose 1%, with the German car maker in advanced talks with a Chinese auto maker, China Anhui Jianghuai Automobile Co., to produce electric cars in the country.

Asia-Pacific stocks

Greater China highlights

  • China Singyes Solar (750 HK): To pull out of northern market: SCMP 
  • Longfor Properties (960 HK): Substantial holder to sell 150m shares 
  • MMG (1208 HK): Hires Goldman Sachs to advise on Golden Grove: The Australian 

Japan highlights

  • Asahi (2502 JP), Kirin (2503 JP): Both have registered to bid for a stake in Vietnam’s Sabeco; Asahi rated new market perform, Kirin underperform at Bernstein 
  • NTT Data (9613 JP): Profit may rise 20bn yen on accounting shift: Nikkei 
  • Japan Display (6740 JP): Expects positive free cash flow this year: Nikkei 

Southeast Asia highlights

  • Astra Intl (ASII IJ): Unit plans to sell 2.1tn rupiah bonds 
  • Vinamilk (VNM VN): Company in talks to buy another US company: CEO 
  • Telkom Indonesia (TLKM IJ): NEC wins undersea cable order from company: Nikkei 

Source: Bloomberg



Rumours of an oil output freeze are losing power to support prices. Photo: iStock


– Edited by Susan McDonald

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