Morning Report APAC: Stocks buoyant on Wall St lead, China optimism

• WTI posted a 5.2% weekly gain on optimism about summer demand
  
• AUD soared on weak US data and hit lofty evels not seen since 2015
  
• Copper made gained on the improved demand outlook
• The Tokyo Stock Exchange is closed for a public holiday today
  

By Saxo APAC Sales Trading

Speeches (Singapore Time)

• 0930 - New Zealand - Reserve Bank of New Zealand's Geoff Bascand speaks on Net Foreign Liabilities

Overnight news, US

• Weak US data pushed the USD and US treasury yields lower as the market priced out further rate rises from the Fed this year.
• US CPI was flat month on month and up 1.6% y/y versus and expected +1.7%. Core inflation missed expectations of 0.2% with a +0.1% print, +1.7% y/y.
• US retail sales data fell -0.2% versus an expected increase of +0.1%.
• Weak sentiment data from the University of Michigan also added to the negative data prints out of the US.
  

Overnight news, Europe

• President Trump attended Bastille day celebrations in France with President Macron. The Paris climate change agreement dominated discussions with both parties saying there may be a solution to the discord.
  

• USD was weaker against all of its G10 peers on Friday as soft data saw heavy selling pressure.
• AUD: Skyrocketed higher by 1.3% as short positioning and weak US data saw AUD take out multiple key levels. The AUD trades above key resistance and its back to lofty evels not seen since 2015. Traders are now adopting a buy the dip strategy with an eye on the 0.80 handle. AUDNZD buying key a lid on NZD performance.
• JPY, CHF: Safe haven currencies were the underperformers as risk on mode was the key theme of yesterday’s trading.
• Emerging Markets: USD weakness translated into EMN strength with the under pressuring ZAR rebounding strongly on profit taking. RUB traded firmly as oil ended the week around 5% higher.
  

Foreign exchange movements

• AUD: Market was caught short above the 0.78 level, vols much higher there. One months moved 0.4 vols.
• EUR: despite the EURUSD spot move, 1 week vols have actually traded lower, market seemingly caught long gamma.
• CAD vols retreated after the Bank of Canada announcement.
  

• US Treasuries made gains sparked by soft June CPI and retail sales data, which were mostly pared heading into the afternoon session. The Treasury 5s30s curve remains near its steepest levels.
• Bunds erased their gains, supported by early covering demand and soft U.S. CPI data.

 

 

• Despite poorer CPI and Retail Sales data that were released on Friday, all 3 U.S indices still manage to close in the green as the Dow broke through the 21,500 convincingly while the Nasdaq was the outperformer as it finished 0.89% higher.
• JP Morgan, Citigroup and Wells Fargo announced their earnings on Friday. JP Morgan was down 0.91%  despite earnings exceeded consensus estimates but the revenue miss coupled with a softer guidance in current quarter punctuate the positive momentum of the banks as they closed slightly in the red on Friday. Wells Fargo was the biggest loser at 1.1% while Citi closed 0.51% lower.
• Sprint Corp. rose as much as 5.1% as Chairman Masayoshi Son held talks with billionaires Warren Buffett and John Malone about investing in the wireless company.
• Softer earnings from U.S banks also saw European banks retreated slightly with Deutsche and BNP Paribas declining 0.9%.

Hong Kong analyst views

• Hangzhou Hikvision (002415 CH): Cut by UBS as Positive News Seen Priced In.
• Henderson Land (12 HK): Raised to Overweight at JPMorgan, price target HK$HK52.60.
• Qingdao Haier (600690 CH): Raised to Outperform at Macquarie, PT 15.50 Yuan.
• Qingdao Haier (600690 CH): Upgraded to Outperform at Macquarie; PT 15.50 Yuan.
  

Hong Kong stocks

• Beingmate Baby & Child Food (002570 CH) Expects 1H Loss to Be Between 350m-380m Yuan.
• BoCom (3328 HK) to Invest HK$7.9b in New Wholly-Owned Unit in Hong Kong.
• CGN Power (1816 HK) January-June Power Generation Rises 24% on Year.
• Chalco (2600 HK) Says Templeton Asset Cuts Stake to 4.997% From 5.01%.
• China Mer Port (144 HK) Expects H1 Profit to Rise More than 50%.
• China Railway Welcomes Tencent (700 HK) Joining Rail Reform: Peoplerail.
• China United (600050 CH) Shares to Remain Suspended for One Month.
• CIMC (000039 CH): CIMC Expects H1 Net Income of 700m-900m Yuan.
• CITIC Securities (600030 CH): First Half Preliminary Net 4.93 Bln Yuan.
• Datang’s Grid Load in Beijing, Tianjin Hits Record on Heat Wave.
• Daimler, Chery Reach Deal on EQ Brands for Electric Cars: Link.
• DJE (002672 CH) Expects H1 Net To Rise Up to 20%.
• Great Wall Motor (2333 HK) Plans to Buy 25% Stake in New Energy Automaker.
• Hong Kong’s ‘Superman’ Billionaire Li Renames Property Company.
• ICBC (601398 CH): JBS Says Board Approved Agreement W/ Banks on July 7.
• Jiangsu Yuyue (600055 CH) Says Chairman Wu Guangming Under CSRC Probe.
• Leshi Internet (300104 CH): Leshi Internet Sees Jan.-June Net Loss of Up to 641.7mln yuan.
• Las Vegas, New York Casinos Fuel Asian Gambling’s U.S. Push.
• Macau Casino Junket Operator Warns of Liquidity Risk, Daiwa Says (1128 HK; 1928 HK; 200 HK; 2282 HK; 27 HK; 880 HK).
• Neusoft (600718 CH), China Telecom Sign Cooperation Pact on Big Data.
• Northern Rare Earth (600111 CH) Expects H1 Net to Rise 230%-260% on Year.
• Rusal (486 HK) Says 1 Dead in Mine Incident, Mine Operating as Normal.
• Shenwan Hongyuan (000166 CH) First Half Preliminary Net 2.02 Bln Yuan.
• Wandong Medical (600055 CH) Says Chairman Wu Guangming Under CSRC Probe
• Xinjiang Goldwind (002202 CH) Expects H1 Net Income at 1.02B-1.45B Yuan.
• Zoomlion (000157 CH) Expects 1.1bn-1.3bn Yuan 1H Net Income vs Loss Year Ago.

Japan analyst views

• Dip (2379): Raised to outperform from neutral at Tachibana Securities.
• Fast Retailing (9983): Q3 profit missed analyst est.; cut to neutral from overweight at JPMorgan; ADRs fall 3.6%.
• Fujitsu General (6755): Cut to neutral from outperform at SMBC Nikko.
• Saizeriya (7581): Cut to neutral from buy at Ichiyoshi Research.

Japan stocks

• Daikokutenbussan (2791): Full-year operating profit +3% y/y to ¥5.9bn vs company forecast for ¥6.1bn; forecasts ¥6.2bn for current fiscal year.
• Daiwa Computer (3816): To conduct 1.1-for-1 stock split effective August 1.
• DIC (4631): 1H operating profit 27b yen vs co. forecast ¥28b yen, Nikkei says.
• Ichigo (2337): 1Q operating profit -48% y/y to ¥2.8bn; maintains full-year forecast at ¥20.6bn.
• JSR (4185): 1Q operating profit 10b yen, Nikkei says; Bloomberg est. ¥8bn.
• Kao (4452): Initiated at neutral at Okasan Securities; PT ¥6,750.
• NEC (6701): Said to weigh £900mln bid for UK’s Civica, Sky says.
• Noda (7879): Lifts full-year operating profit forecast 23% to ¥4bn.
• S Foods (2292): 1Q operating profit +15% y/y to ¥2.8bn, maintains full-year forecast at ¥11.5bn.
• Sakata Seed (1377): Forecasts operating profit -13% to ¥6.7bn for current fiscal year.
• Teijin (3401): Fast-tracking plans to expand its industrial fibers brand Twaron to keep pace with demand; enters license and developmentagreement in Japan with Radius Health for abaloparatide-SC for osteoporosis.
• Tepco (9501): New chairman aims for profitable nuclear business.
• Tokyo Gas (9531): To renegotiate with LNG suppliers on resale restrictions.
• Toshiba (6502): San Francisco court to hold hearing on Western Digital’s motion for injunction on transfer of rights in JV.
• Totenko (8181): Q1 operating profit for parent co. surges to ¥67mln from ¥7mln a year earlier; maintains full-year forecast at ¥130mln.

Australia analyst views

• Programmed Maintenance (PRG): Cut to neutral at JPMorgan, price target $A3.08.
• Ramelius Resources (RMS): Cut to accumulate at Hartleys Ltd, PT $A0.53.

Australia stocks

• Quadrant Energy is said to start non deal roadshow: AFR
• Central banks to bar those who don’t sign FX code: Australian
• ANZ Bank (ANZ): DBS Indonesia seeks to complete ANZ unit acquisition February 2018
• Bellamy’s (BAL): Said to invite holders to opt out of funding: AFR
• BHP Billiton (BHP), Rio Tinto (RIO): Top mining nation readying fresh investment wave as prices rally.
• Cimic (CIM): Offers five ticket levels for $A1.6bn revolver.
• Newcrest (NCM), Northern Star (NST), Evolution (EVN), Saracen (SAR), Regis Resources (RRL), Resolute Mining (RSG), OZ Minerals (OZL): Gold gains most since May as economic stumble dims rate outlook.
• Qantas (QAN): Stock posts first weekly decline since April.
• Telstra (TLS), TPG Telecom (TPM), Vocus (VOC): KKR-led bargain hunt signals revival for Australian telco stocks.
• Woodside (WPL), WorleyParsons (WOR), Oil Search (OSH), Beach Energy (BPT), Karoon (KAR), Origin Energy (ORG), Santos (STO): Oil caps weekly gains as investors perk up on state of market.
• Bank of New York Australia ADR Index +1.4%, advancing a sixth session in longest winning streak since Nov. 14.
• BHP Billiton ADR +2% to $A25.17 equivalent, little changed from last Sydney close.
• Rio Tinto ADR +1.4% to $A57.72 equivalent, ~12% discount to last Sydney close.
• Companies trading above 20, 50 and 200 day moving averages, Bollinger upper band with RSI above 70: PTM.
• Companies trading below 20, 50 and 200 day moving averages,, Bollinger lower band with RSI below 30: None among screened stocks.

WTI posted a strong 5.2% weekly gain last week, on optimism about robust summer demand from consumers. Photo: Shutterstock

 

– Edited by Robert Ryan

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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