Morning Report APAC: Tech shares rebound, oil stocks slide

• Oil retreated on a lack of solid data to support the rebalancing of global markets
  
• XAUUSD encountered intraday resistance at around $1274/oz 
• Base metals eased as the stronger dollar dampened investor appetites
  
• Grains slid, led by soybean, after rains boosted US crops
  

By Saxo APAC Sales Trading

Economic data of the day (Singapore Time)

Speeches (Singapore Time)

• 0930 – Japan: Bank of Japan board member Yukitoshi Funo speaks in Sapporo
• 2300 – US: Cleveland Fed President Loretta Mester speaks to Community Banking Conference
• 0330 – US: San Francisco Federal Reserve Bank President John Williams speaks in Las Vegas on monetary policy

Overnight news, US

• The PCE Deflator which is the Fed’s best measure of inflation was flat in June as expected. It was up 1.4% YoY (Exp. 1.3%) from 1.5% YoY. It has dropped for four consecutive months on an annual basis, from 2.2% in February.
• ISM Manufacturing came in at 56.3 in July from 57.8 (Exp. 56.4) showing no weakness in the manufacturing sector.
• Construction Spending dropped 1.3% MoM (Exp. +0.4%). The weak result was even worse than estimated, particularly in the government sector, suggesting there will be minor downward revisions to Q2 GDP.
  

Overnight news, Washington

• Senate Republicans are sticking to their plans to pass a tax bill with 50 Republican votes, despite Democratic pleas not to be sidelined as they were on health care. Majority Leader Mitch McConnell on Tuesday reaffirmed the GOP’s longstanding intention to shield any tax overhaul from a likely Democratic filibuster by using the procedural protections of budget reconciliation.
  

Foreign exchange

Foreign exchange movements

• There are still buyers of USDJPY downside which will accelerate if we trade below ¥110.00.
• Some funds are attempted last night to fade the EURCHF move and started to sell 1M and below vols in EURCHF.
  

Rates

• UST yields were lower on the back of weak auto sales data fuelling concerns about consumer spending, which could be impacted if rising rates. 
  
• Bunds were pushed higher by US treasuries rebounding, long end outperformed. Peripherals especially Italy and Spain outperformed.
  

Commodities

 
Equities

Asian equities preview

Hong Kong analyst views

• Beijing Airport (694 HK): H Shares Raised to Hold at Morningstar.
• China Aoyuan Property Group (3883 HK): New Buy at Haitong Intl, price target $HK3.93.
• China Gas (384 HK): Raised to Outperform at Macquarie, PT $HK24.30.
• China Oriental Group (581 HK): New Buy at Zhongtai International.
• China Resources Gas (1193 HK): Raised to Overweight at JPMorgan, PT $HK35.
• ENN Energy (2688 HK): Raised to Outperform at Macquarie, PT $HK63.30.
• Nuode Investment (600110 CH): Initiated at SWS with Buy.
• Shanghai Fosun Pharma (600196 CH): A Shares Cut to Neutral at Goldman.
• Sunny Optical (2382 HK): Cut to Neutral at UBS, PT $HK100.

Hong Kong stocks

• Casinos: Macau Casino Recovery Gains Momentum in July as VIPs Return.
• Energy: China Encourages M&A in LED Lighting Industry: NDRC.
• Power: China to Limit Coal-Fired Power Plants, Push for Mergers: Bjx.
• Banks: New Chiefs at China’s Top Banks Signal More Reshuffles Ahead.
• Bank of Nanjing (601009 CH) Seeks Up to 14b Yuan in Share Sale:Nanjing Gaoke.
• China Aoyuan (3883 HK) Expects at Least 40% Gain in H1 Profit from year ago.
• China Resources and Transportation Group (269 HK): In $HK3.28b Buy Pact.
• CK Hutchison (1 HK) Traders Going All In Pay Record for Bullish Options.
• Fosun Int’l (656 HK): China Forex Regulator Is Said to Be Examining Top Dealmakers.
• Gangsu Gangtai Holding Group (600687 CH): Completes Purchase of 85% Stake in Buccellati.
• Geely (175 HK):Lynk & Co. Name Sounding Like Lincoln Riles Ford’s Luxury Brand.
• Hong Kong Exchanges & Clearing (388 HK): Plans Blockchain-Driven Private Market Venture.
• HSBC (5 HK) Bought Back 2.06mln Shares at Average 764.86 Pence Each August 1.
• Huaneng Power (902 HK) H1 Net 243.9mln Yuan Vs Restated 6.18b Yuan year ago.
• Hutchison Telecommunications (215 HK): Co. Doesn’t Rule Out Special Dividend: Sing Tao.
• Jingrui Holdings (1862 HK) Reports Capital Injection into Ningbo Xiangjun.
• New World Department (17 HK) Privatization Offer Extended to August 15.
• Pangang Group Vanadium Titanium & Resources (000629 CH): Appeals Ruling on Criminal Trade Secret Summons.
• SJM Holdings (880 HK) First Half Adjusted Ebitda $HK1.51bn.
• Sunac (1918 HK):China’s Spendthrift Billionaire Triples Wealth as Shorts Circle.
• Yanzhou Coal (1171 HK) to Pay $1b to Fund Yancoal’s Rio Unit Purchase.

Japan analyst views

• Hogy Medical (3593): Raised to neutral from underweight at Mitsubishi UFJ Morgan Stanley
• Honda Motor (7267 JP): Raised to neutral from reduce at Nomura

Japan stocks

• U.S. auto sales for July: Honda (7267) -1.2% vs est. -3.6%; Nissan (7201) -3.2% vs est. -3.3%; Toyota (7203) +3.6% vs est. -3.8%
• Asahi Glass (5201): Lifts full-year operating profit outlook 9.5% to 115b yen
• Coca-Cola Bottlers Japan (2579): Half-year operating profit +10% y/y to 17.1b yen
• Daiichi Sankyo (4568): Announces settlement on olmesartan products cases, capped at $300m
• F@N Communications (2461): Prelim. H1 operating profit 3.1b yen vs earlier forecast 3b yen
• Godo Steel (5410): Q1 operating profit +47% y/y to 595m yen
• GS Yuasa (6674): Q1 operating profit -3.7% y/y to 2.9b yen
• Gunma Bank (8334): Q1 net income +31% y/y to 14.5b yen
• Hogy Medical (3593): Raised to neutral at MUFG
• Honda Motor (7267): Lifts full-year operating profit outlook to ¥725.0bn from ¥705bn.
• JFE (5411): Swings to Q1 net income of ¥57.1b yen from ¥11.7bn loss a year earlier.
• Kagome (2811): Half-year operating profit +12% y/y to ¥6.2bn.
• KDDI (9433): Q1 operating profit +2.3% on increase in mobile revenue.
• Miraca (4544): Q1 operating profit slips 1.4% y/y to 7.2b yen while net income more than doubles to 4.6b yen.
• MUFG (8306): Q1 net income +53% on trading income and shareholding sales.
• NOK (7240): Q1 operating profit surges to 6b yen from ¥377mln a year earlier.
• NSK (6471): Q1 net income +42%, keeps full-year targets unchanged.
• Otsuka Corp. (4768): H1 operating profit 26.8b yen vs co. forecast ¥24.7bn.
• Outsourcing (2427): Half-year operating profit +51% y/y to ¥3.6bn.
• Rohm (6963): Q1 net income jumps to ¥10.2bn from ¥2bn a year earlier.
• Sanrio (8136): Q1 operating profit falls 37% y/y to ¥1.28bn.
• Santen Pharma (4536): Q1 operating profit +12% y/y to ¥12.1bn.
• Septeni HD (4293): 9-month operating profit slides 47% y/y to ¥1.7bn.
• Sony (6758): Q1 operating profit at 157.6b yen, beating analysts’ estimate for ¥133.3bn.
• Sumitomo Chemical (4005): Q1 operating profit +49% y/y to ¥37.6bn.
• Sumitomo Electric (5802): Q1 operating profit at 27.8b yen vs. analyst estimate for ¥28.3bn.
• Toho Holdings (8129): Q1 operating profit slips 35% y/y to ¥2.4bn.
• Tokyu Fudosan (3289): Q1 operating profit +86% y/y to ¥17.4bn.
• Ube Industries (4208): Q1 operating profit surges to ¥9.1bn from ¥1.6bn a year earlier
• Yamaha (7951): Revises up full-year operating profit outlook to ¥50bn from ¥48.5bn.

Australasian analyst views

• CAR: Carsales.com New Neutral at JPMorgan, PT A$12.50
• FLN: Freelancer Cut to Neutral at UBS, PT A$0.70
• JHC: Japara Downgraded to Neutral at UBS; PT Lowered to A$2.15
• ISD: Isentia Cut to Hold at Morningstar
• OZL: OZ Minerals Cut to Sell at Morningstar
• REA: REA Group New Neutral at JPMorgan, PT A$70
• SEK: Seek New Overweight at JPMorgan, PT A$20
• SEA: Sundance Energy Cut to Speculative Buy at Canaccord, PT A$0.19

• AQG: Alacer Gold Second Quarter EPS Beats Estimates.
• AJA: Astro Japan to Sell Property Interests to Funds Managed by Blackstone.
• BHP: BHP Is Said to Plan Auction for Gregory Crinum Coal Asset: AFR.
• BWP: BWP Trust to report full-year earnings.
• FSF in NZ: Whole Milk Powder Average Price Rises to $3,155 a Ton.
• GMA AU: Genworth Australia to report first-half earnings.
• NAB: NAB Committed to Wealth Product Manufacturing: AFR.
• RIO: Rio Tinto to report first-half earnings.
• RMD: ResMed 4Q Adj. EPS, Revenue Top Estimates.
• WES: Wesfarmers Is Said to Hire Ed Bostock Head of Business Devt: AFR.
• YAL: Yanzhou Coal to Pay $1bn to Fund Yancoal’s Rio Unit Purchase.

Sun sets on crude price rise hopes... Oil prices retreated on a lack of solid data to support any optimism about a rebalancing of global supply and demand. Photo: Shutterstock

 
– Edited by Robert Ryan

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