Article / 11 April 2017 at 1:48 GMT

Morning Report APAC: Solid oil price helps support jittery markets

APAC Sales Trading Desk / Saxo Capital Markets
Singapore

 

  • Gold traded in a tight trading range and capped by strong 200 day moving average
  • The geopolitical situation in may support the safe haven metal in the short term
  • Zinc fell 2.7%, leading losses in industrial metals as supply concerns subsided
  • Oil held onto recent gains, helped by the US strike on Syria
  • Cocoa resumed its downtrend, slumping on news of a record Ivory Coast harvest

By Saxo APAC Sales Trading

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Speeches
  • 2300: Italy -- European Central Bank Governing Council member Ignazio Visco  speaks before European Parliament

Overnight news

  • Federal Reserve Chair Janet Yellen said the central bank’s task has shifted from a post-crisis exercise of healing the economy to one aimed at holding on to progress made. "Before, we had to press down on the gas pedal trying to give the economy all of the oomph that we possibly could,” Yellen said Monday in Ann Arbor, Michigan.
  • The Fed is now trying to “give it [the economy] some gas, but not so much that we’re pushing down hard on the accelerator," Yellen said. “The appropriate stance of policy now is closer to, let me call it neutral,” (Bloomberg) 

Overnight news, North Korea

  • China 'deploys 150,000 troops to deal with possible North Korean refugees over fears Trump may strike Kim Jong-un following missile attack on Syria'. Trump's Syria strike on Friday was widely interpreted as a warning to North Korea. China, which was left shocked by the air strikes, has deployed medical and backup units from the People's Liberation Army forces to the Yalu River.
  • The troops have been dispatched to prepare for pre-emptive attacks by the US. The US Navy has moved the USS Carl Vinson aircraft carrier strike group from Singapore to North Korea after the country conducted more missile testing (Dailymail)

 

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  • USD was slightly offered following the news that China deployed troops to deal with a possible strike against North Korea by the US.
  • USDJPY remains supported just above ¥110. A break below would push the pair to the 200 day moving averate at ¥108.68 first then there is nothing until ¥105.
  • USDCAD was offered on the back of the oil price rally. Oil is now trading close to the 55 resistance. USDCAD is at the support above the 100d MA at 1.3287.
  • Emerging Markets: USDZAR confirmed a break above the 200 day moving average. South African president Jacob Zuma will face a vote of no confidence on April 18. USDBRL trades just above the 3.10 support level. Watch the BCB rate decision on Wednesday where the market expects a 100 basis point cut.
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  • Cross JPY Vega is bid following the rally in VIX and a fear of more geopolitical risks.
  • The Risk Reversal of EURUSD is at the extreme high for EUR downside. The one month is at -3.75 down from -1.3 in three days with French presidential candidate Jean-Luc Mélenchon getting a little closer to the second round.

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  • US Treasuries rose amid risk off bid on the back of geopolitical concerns over the Middle East and the Korean peninsula.
  • French bonds fell, widening the yield spread over Germany to its highest since February.

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  • US indices were almost flat, up 0.1% for all US indices despite strong trading activities initially. Dow Jones Industrial index has been seeing strong resistance at 20,750 as similar resistance is seen at the S&P500 at 2370.
  • European markets finished mixed as the CAC 40 dropped 0.54% while the Dax lost 0.20% as only the FTSE 100 in London closed unchanged.
  • Hedge funds Jana Partners has increased its stake in Whole Foods Market to 8.3% as the hedge fund looks to shake up and overhaul the board and senior management of the high-end grocer for a possible sale in future. WFM closed 10% higher to $34.17 and on chart, broke a key trend line resistance.
  • US wireless carrier AT&T announced that it will buy Straight Path Communications, a holder of licenses to wireless spectrum, for $1.25 billion, a 200% premium acquisition. The two companies have signed a definitive agreement for the all stocks transaction which will mean holders of Straight Path communications will turn to be shareholders of AT&T. Straight Path Communications closed at $91.64, up 151%.

Asia Pacific equities preview

Hong Kong analyst views

  • Anhui Conch (600585 CH): Cut to neutral at Haitong Intl.
  • China Merchants Bank (600036 CH): Cut to neutral at Mizuho.
  • Cnooc (883 HK): Rated new buy at DBS Vickers.
  • Dongfeng Motor (489 HK): Cut to underperform at CLSA.
  • Guangzhou Auto (2238 HK): Cut to underperform at CLSA.
  • Humanwell Healthcare (600079 CH): Rated new buy at Sealand.
  • ICBC (1398 HK): Cut to neutral at Mizuho.
  • Industrial Securities (601377 CH): Rated new add at GF Secs.
  • Shanghai Fosun Pharma (600196 CH): A shares new buy at Sealand Securities.
  • Shanghai Fosun Pharma (600196 CH): Rated new buy at Sealand.
  • Sino-Ocean Group (3377 HK): Cut to neutral at UBS.
  • SPIC Yuanda (600292 CH): Rated new add at Sealand.
  • Sunny Optical (2382 HK): March handset lens sets shipments rise 54.8% y/y.
  • Tongda (698 HK): Rated new buy at DBS Vickers.

Hong Kong stocks

  • Banks: CBRC to strengthen risk controls.
  • Coal: China said to set coal mining supply contract requirements.
  • Developers: China March avg. home price growth quickens on month: Fang.
  • Tech: China targets 430b yuan cloud computing industry by 2019.
  • CCB (939 HK): Liao takes position of Chief Risk Officer.
  • CK Property (1113 HK): Spent $HK2.43bn in nine buybacks since March 23.
  • China Coal (1898 HK): expects Q1 net to be 1bn-1.3bn yuan vs loss year ago.
  • China Merchants Port (144 HK): In pact for 5.43bn yuan Shantou Port shares.
  • China Resources Power (836 HK): March power generation rises 5.7% on year.
  • Cinda Asset Management (1359 HK): To issue up to 30bn yuan bonds in China.
  • Citic Ltd. (267 HK): H.K. tribunal finds no misconduct.
  • Kaisa (1638 HK): March contracted sales rise 37.6% y/y to 2.9bn yuan.
  • Gezhouba (600068 CH): To invest 200b yuan in Sichuan over 5 years.
  • Industrial Securities (601377 CH): FY net 2.05b yuan vs 4.17bn yuan yr ago.
  • Pudong Development Bank (600000 CH): To name Gao Guofu as chairman: Caixin.
  • SAIC (600104 CH): Says hasn’t signed any formal pact with GM for India plant.
  • Shandong Luoxin (8058 HK): Sets special meeting on removing H-share listing.
  • Tencent (700 HK): Futu close to raising over $100mln in funds.
  • Yonghui Superstores (601933 CH): Prelim. Q1 net 743.8mln yuan.

Japan analyst views

  • CyberAgent (4751): Raised to neutral at Cantor, PT ¥3,300.
  • Eizo (6737): Rated new buy at Ichiyoshi Research.
  • Japan Hotel REIT (8985): Raised to outperform from neutral at SMBC Nikko.
  • Lifenet Insurance (7157): Cut to neutral from overweight at Mitsubishi UFJ Morgan Stanley.
  • Nippon Yusen (9101): New outperform at Tokai Tokyo Securities.
  • Sakai Moving (9039): Raised to outperform from neutral plus at Iwai Cosmo.
  • Sumco (3436): Upgraded to overweight from neutral at JPMorgan.
  • Sumitomo Forestry (1911): Downgraded to neutral from overweight at Mitsubishi UFJ Morgan Stanley.

Japan stocks

  • Adastria (2685): Co. and Ryohin Keikaku (7453) may cancel cross-shareholding, Nikkei reports.
  • Felissimo (3396): Forecasts operating profit of ¥631mln for current fiscal year after loss of 499m in latest FY.
  • Hitachi Construction Machinery (6305): Raised to buy from neutral at Haitong.
  • JFE Engineering (5411): Wins LNG terminal order in Fukushima, Nikkei reports
  • J Front Retailing (3086): Forecasts operating profit little changed y/y at ¥44.5bn for current fiscal year; analyst est. ¥49.9bn.
  • Lawson (2651): March convenience store same-store sales -0.3%.
  • Medical Data Vision (3902): To split shares 2-for-1 on May 1.
  • Mitsui & Co. (8031): AK Steel drops after Mitsui pours cold water on takeover rumours.
  • Mizuho Bank (8411): ICD signs $300m commodity Murabahah financing with Mizuho Bank.
  • Nissan (7201): To spend 100b-200b yen to realign Japan dealers, Yomiuri reports; Nexteer in joint venture with Dongfeng components.
  • Only (3376): Reports group half-year earnings forecasts.
  • Panasonic (6752): Gorenje supervisory board member Toshibumi Tanimoto quits.
  • Pictet - Japanese Equity Opportunities: Adds Sompo Holdings (8630) to its investments and exited Yamaha Motor (7272) in the latest semi-annual reporting period; four new buys, 12 selloffs.
  • Plenus (9945): Full-year operating profit of ¥7.19bn missed co. guidance of ¥7.5bn; gives same target for current FY.
  • Renesas (6723): Says open to major acquisitions but no talks on Toshiba deal.
  • Riso Kyoiku (4714): Forecasts operating profit +18% to ¥2.42bn for current fiscal year.
  • Seven & i (3382): On watch negative at S&P after purchase of Sunoco stores.
  • SoftBank (9984): Son said to be willing to cut Snapdeal valuation 85% to $1b to secure its merger with Flipkart.
  • Sony (6758): Forms electronic-paper display venture with E-Ink.
  • Sumida (6817): Seeks ~5.37b yen in public share sale.
  • Sumitomo (8053): Will enter Brazil waterworks business, Nikkei says.
  • Teijin (3401): Will spend ¥2bn in Vietnam airbag fabric plant, Nikkei reports.
  • Teikoku Sen-I (3302): Sparx demands co. improve use of capital, sell-down stake in Hulic (3003).
  • Toshiba (6502): May release a limited or unaudited financial statement on Tuesday, April 11, hoping to avoid a third delay, Jiji Press reports; Toshiba, auditor at odds over Westinghouse controls, Nikkei reports.
  • Toyota (7203): Invests $1.33bn in Kentucky plant building Camry; Trump takes credit for Toyota spending.
  • Yondoshi Holdings (8008): Forecasts operating profit +4.9% to ¥6.85bn for current fiscal year.

Australia analyst views

  •  Ardent Leisure (AAD): Cut to sell at UBS, price target $A1.75.
  • Asaleo Care (AHY): Cut to neutral at Credit Suisse, PT $A1.75.
  • Downer EDI (DOW): Raised to neutral at Credit Suisse.

Australia stocks

  • Australia’s biggest pension fund mulls U.S. infrastructure buys.
  • ANZ Bank (ANZ): May be best positioned vs peers to handle new capital rules: BI.
  • Aurizon (AZJ): Coal pacts poised to stay above $200 as rain swamps supply.
  • BHP Billiton (BHP): Billionaire hedge fund’s proposal gets cautious reaction
  • Challenger (CGF): Starts absolute return global bond strategies fund.
  • Fortescue (FMG): Iron slumps into bear market as Barclays sees further losses.
  • Macquarie (MQG): To buy Hindustan Powerprojects assets for $600mln: Mint.
  • Mesoblast (MSB): ADRs jump as Maxim says Phase 3 data superior to others.
  • Newcrest (NCM), Northern Star (NST), Evolution (EVN), Saracen (SAR), Regis Resources (RRL), Resolute Mining (RSG), OZ Minerals (OZL): Gold slips for first time in three sessions on rates outlook.
  • Rio Tinto (RIO): Warns Australia at risk of being ‘left behind’ on tax: BNA.
  • Seven Group (SVW): Caterpillar forecast may rise as demand strengthens: Street Wrap; NOTE: Is authorized dealer in West Australia, NSW, North China.
  • Sirtex (SRX): Delays share buyback until clinical data released in June.
  • Woodside (WPL), WorleyParsons (WOR), Oil Search (OSH), Beach Energy (BPT), Karoon (KAR), Origin Energy (ORG), Santos (STO): Oil caps longest gain this year as biggest Libyan field halts.
  • Bank of New York Australia ADR Index +1.5%.
  • BHP Billiton ADR +3.5% to A$25.50 equivalent, 0.9% discount to last Sydney close.
  • Rio Tinto ADR +0.6% to A$54.48 equivalent, ~10% discount to last Sydney close.
  • Companies trading above 20/50/200 day moving averages, Bollinger upper band with RSI above 70: AGL, NCM, ALL, BTT, GMG, ORG, SKC.
  • Companies trading below 20/50/200 day moving averages, Bollinger lower band with RSI below 30: VOC.
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The focus of global geopolitical tension has switched to Asia, after reports that China, above, has sent troops to its border with North Korea. Photo: Shutterstock

 

– Edited by Robert Ryan


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