Global markets are reeling this morning after the US president trumped his previously announced tariffs on $50bn worth of Chinese imports with the threat of another $200bn worth should the Chinese retaliate with penalties of their own on his initial tariffs. The heightened fear of a full-blown trade war has slammed into equities and EM currencies with the usual safe-haven assets – gold, bonds and the Swiss franc – gaining.
Article / 19 April 2017 at 1:53 GMT

Morning Report APAC: Pound rallies on Theresa May's UK election call

APAC Sales Trading Desk / Saxo Capital Markets


  • Theresa May called for a UK election on June 8
  • USD dropped significantly following the call 
  • GBPUSD rallied 2.20% to its highest level since last October
  • US Treasury yields fell to lowest in 2017 on tax policy and geopolitical concerns
  • Geopolitical uncertainty is maintaining support for gold
  • US indices were in the red with the Dow Jones Industrial the worst performer 

By Saxo APAC Sales Trading

Economic data of the day (Singapore Time)




1600 – EC – ECB’s Ardo Hansson speaks on outlook for euro area, Estonia

2000 – EC – ECB executive board member Benoît Cœuré speaks in New York 

2230 – EC – ECB executive board member Peter Praet speaks in New York 

0030 – US – US Federal Reserve’s Eric Rosengren speaks at Bard College conference 

0100 – CA – Bank of Canada senior deputy governor Carolyn Wilkins speaks 

0200 – US – US Fed releases Beige Book

Overnight news

UK:  Theresa May called for a snap election on June 8, betting she can secure a personal mandate and parliamentary backing to take her through Brexit talks. A recent poll shows Conservatives have a 21-point lead over Labour, and a solid victory could help silence critics within and outside of her party.  


France:  French security authorities arrested two men in Marseilles for planning an attack during the presidential race. Both suspects are French citizens and turned to radical Islam during a stay in prison, Interior Minister Matthias Fekl said.

Latest polls:

Ifop Elabe Opinionway Kantar Sofres 

Macron 23 24 23 24 

Le Pen 23 23 22 23 

Fillon 19 19.5 20 18.5 

Mélenchon 19.5 18 19 18 

Hamon 8 8 8 8

And for a note of humour regarding the French elections, watch Last Week Tonight with John Oliver (it’s very funny).




USD dropped significantly following the snap election call from Theresa May in the UK. DXY broke back the 100 level and is reaching the support made by the 100-day moving average.

GBPUSD has rallied 2.20% to trade at the highest level since October last year and easily broke the 200-day MA. The next big level to watch is now 1.3000 but it will be all news-related. 

USDCHF collapsed following the risk-off mood, with the US 10-year yield down and equities down. USDCHF is now trading at the 200-day MA support at 0.9949. 

USDJPY has managed to stay below the 200-day MA at 108.86. Another close below that level could trigger another round of selloff. 

EUR followed GBP higher and put the pair back in the middle of the range set by the 100-day/ 200-day MA.

Foreign exchange movements


The focus remains on the French elections. EURJPY downside is bid but no major flows overall.

GBP volatilities are higher on the front end following the spot move.




Most UST yields fell to their lowest levels of 2017, with the 10-year yield below closing levels since November 10, driven by fading expectations for US tax reform as well as geopolitical concerns.

German bunds gained on flight-to-quality bid, paring earlier gilt-led losses. The UK 10-year yield traded under 1% for the first time since October before rebounding with the pound following Prime Minister May’s call for an early general election in June.







US indices were in the red with the Dow Jones Industrial the worst performer yesterday. It dropped 0.55% on poor earnings from Goldman Sachs and Johnson & Johnson on weaker earnings.

Goldman Sachs plunged 4.72% on Tuesday on heavy volume after its earnings failed to meet analysts' estimates. Trading revenue, which is a core for Goldman, only grew 1% year-on-year due to the low volatility and was much weaker compared with peers. Goldman Sachs closed at $215.59. 

The S&P 500 healthcare index was dragged 1.4% lower by Johnson & Johnson's release of its quarterly result. J&J dropped 3.4% on lower revenue as increased pressure to cut medicine prices and an industry-wide slowdown in consumer health product sales is hurting the healthcare industry. J&J closed at $121.82.


 GBPUSD rallied 2.20% after Theresa May called for an election on June 8. Photo: Shutterstock

Asian equities preview

Hong Kong analyst views

  • Air China (753 HK): Cut to underweight at Morgan Stanley 
  • China Coal (1898 HK): Raised to hold at HSBC 
  • China Eastern (670 HK): Cut to underweight at Morgan Stanley 
  • China Southern (1055 HK): Cut to underweight at Morgan Stanley 
  • Geely Auto (175 HK): Raised to buy at Daiwa 
  • ICBC (1398 HK): H Shares Raised to Buy at Morningstar 
  • Mayinglong Pharmaceutical (600993 CH): Rated new buy at UBS 
  • New China Life (1336 HK): Raised to outperform at Macquarie 
  • Tencent (700 HK): Rated new buy at Benchmark 
  • Xiabuxiabu (520 HK): Raised to outperform at KGI Securities

Hong Kong preview

  • Automakers: Cadillac sees China luxury segment growth outpace overall market 
  • Aviation: Home-grown C919 jet passed review for its maiden flight 
  • Developers: NDRC working on long-term mechanism to stabilize housing market: CNR 
  • Electric cars: Dongfeng’s Liu sees idle capacity risks in rise of NEVs 
  • Energy: SOE, financial reform among China’s major 2017 tasks: Xinhua 
  • Belle (1880 HK): May be worth HK$62b, CCB International says 
  • CCB (939 HK): Sets up Singapore center: Business Times 
  • CK Prop (1113 HK): Buys back 1.43m shares For HK$78.3M 
  • CNOOC (883 HK): Yang Hua quits as CEO, remains Chairman 
  • CSPC Pharma (1093 HK): plans spin-off of CSPC XNW Pharma 
  • Dongfeng (489 HK): to boost sales to over 5.6m units by 2020 
  • Huishan Dairy (6863 HK): Holder Yang Kai sold Jiutai shares; loses two directors, making board unable to act 
  • Hsin Chong (404 HK): FY net loss HK$2.73bn vs HK$2.45bn profit year earlier; to sell property, shareholder’s loan for HK$760m 
  • Luzhou Laojiao (000568 CH): FY net 1.93bn yuan 
  • Minsheng Bank (600016 CH): Employee suspected to have violated law 
  • MTR (66 HK): Invites developers for New Territories project: Standard 
  • Omnijoi (300528 CH): To expand IMAX partnership in China 
  • United PV (686 HK): Plans Belt-Road plants that will quadruple capacity 
  • Yingde (2168 HK): Seeks legal advice over dismissed employees 
  • Zijin Mining (2899 HK): Sees 1Q net income at 1bn yuan

Japan analyst views

  • Koa (6999): Raised to overweight at MUFJ-MS, PT 1,600 yen 
  • Resona (8038): New overweight at Morgan Stanley 
  • Santen Pharma (4536): Rated new neutral at Tokai Tokyo 
  • Sapporo (2501): Raised to overweight at JPMorgan 
  • Sumitomo Mitsui Trust (8309): New underweight at Morgan Stanley

Japan stocks preview

  • 3-D Matrix (7777): Seeks 1.86b yen from sale of warrants to Merrill 
  • Energy industry: Prime Minister Shinzo Abe’s administration requested Toyoshi Fuketa be next chairman of the Nuclear Regulation Authority 
  • Exporters: U.S. Vice President Mike Pence says he shares Trump’s impatience on Japan trade relations 
  • Hoshino Resorts REIT (3287): To sell shares to public at 559,080 yen 
  • Ichiyoshi Securities (8624): Preliminary full-year operating profit -19% y/y at 2.99b yen 
  • Meganesuper (3318): To set up wearable devices unit 
  • Mitsubishi UFJ Financial (8306): Signs preliminary agreement with research institution SRI for fintech 
  • Sumitomo Mitsui Financial (8316): Bank unit signs preliminary agreement with Riken on science, technology 
  • Tokyo Gas (9531): Sold 1,490.2 million cubic metres of gas in March; to acquire 33.33% stake in US shale gas-fired plant 
  • Welcia Holdings (3141): To acquire Marudai Sakurai Yakkyoku for 14.5bn yen 
  • Yamato Holdings (9064): Oper. profit for year ended March 31 misses company’s estimate by 41%

Australia analyst views

  •  Myer (MYR): Cut to neutral at Macquarie 
  • National Australia Bank (NAB): Raised to add at Morgans Financial, PT A$35 
  • TPG Telecom (TPM): Raised to buy at Morningstar

Australia stocks preview

  • Goldman sees buyer interest in Australia as economy diversifies 
  •  Aristocrat (ALL): Churchill, Scientific Games rise in U.S. after International Game sells Double Down to Double U 
  •  Aurizon (AZJ): Scheduled to release March sales, rev. data; NOTE: April 18, Co. cut earnings forecast after cyclone 
  •  Australian Agricultural Co. (AAC): U.S. seen surpassing Australia as Japan’s top beef supplier 
  •  BHP Billiton (BHP): Iron ore reels again as Citigroup says it’s bearish on outlook 
  •  Charter Hall Group (CHC): Names Russell Proutt as new CFO 
  •  Fonterra (FSF): Whole milk powder avg. price rises to $2,998/t 
  •  Fortescue (FMG): Most oversold in nearly five years: Chart 
  •  Oil Search (OSH): 1Q production report expected; NOTE: Co. in February forecast 2017 output 28.5-30mmboe 
  •  Origin Energy (ORG): Integrated Gas CEO Baldwin to step down; new GM named 
  •  Rio Tinto (RIO): Outlook to positive from stable by S&P 
  •  Santos (STO): Australia’s LNG export deals face review amid gas crisis at home 
  •  Scentre Group (SCG): A1 rating outlook to negative from stable at Moody’s 
  •  Tatts Group (TTS), Tabcorp (TAH), Macquarie Group (MQG): Pacific consortium said to raise all-cash bid for Tatts 
  •  Washington H. Soul Pattinson (SOL): Trades ex-div. 
  •  Woodside Petroleum (WPL): Says North West shelf LNG working to restart output

– Edited by Susan McDonald

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. Follow us on @SaxoStrats on Twitter

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