Article / 07 March 2018 at 1:59 GMT

Morning Report APAC: Trump adviser resignation leads Asia lower

APAC Sales Trading Desk / Saxo Capital Markets
Singapore






 

  • Asian markets were lower after news of another White House resignation
  • Chief economic adviser Gary Cohn is the latest to leave the Trump administration
  • The USD fell against the yen on the resignation news 
  • South Korea said North Korea was open to talks with the US on denuclearisation


By Saxo APAC Sales Trading


Economic data of the day (Singapore Time; GMT+8hrs)

hjh

 

Speeches

  • 0930 – US – Federal Reserve's Robert Kaplan speaks at energy conference
  • 2100 – US – Fed’s Raphael Bostic speaks on the economic outlook
  • 2120 – US – Fed’s William Dudley speaks in Puerto Rico


Overnight news

More tariffs and trade war

  • Gary Cohn is resigning as US President Donald Trump’s top economic adviser, leaving his post as the administration prepares to impose steep tariffs on steel and aluminium that Cohn has opposed.
  • “It has been an honor to serve my country and enact pro-growth economic policies to benefit the American people, in particular the passage of historic tax reform,” Cohn said in a statement released by the White House on Tuesday. “I am grateful to the president for giving me this opportunity and wish him and the administration great success in the future.”
  • The immediate reaction of the market on this news has been S&P Futures down 1.3% and a USD selloff.
  • More about Tariffs (Bloomberg): Under the most severe scenario being weighed, the US could impose tariffs on a wide range of Chinese imports, from shoes and clothing to consumer electronic. The Trump administration could combine the tariffs with restrictions on Chinese investments in the US, which are reviewed for national-security risks by Treasury’s Committee on Foreign Investment in the US. The administration is looking at ways to enforce reciprocity with China on foreign investment, meaning the US would only allow takeovers in sectors that US companies can access in China.

Good news from North Korea

  • North Korea said it was open to denuclearise if the regime's safety was guaranteed. Trump said that “Possible progress being made in talks with North Korea. For the first time in many years, a serious effort is being made by all parties concerned.”
  • This is definitely a big move forward in the negotiations with North Korea and the market reacted well on the news before the announcement departure of Cohn.







Foreign exchange

ghg
















  • The USD major trend lower resumed sold off overnight but for opposite reasons: risk on and positive talks in North Korea, and risk off after Cohn’s resignation. We talked about it and the only intelligent answer on why the USD rallied last week was a clean-up of positioning only. Nothing else makes too much sense otherwise.
  • After a brief selloff EUR is back to the medium trend higher above the 1.12340 support but we should stay in the 1.2200/1.2500 range for the time being.
  • USDJPY is back to the sticky 105.50 after rallying the past two days. We still have a lot of options expiring at this level this week.
  • Emerging Markets: USD never really stopped selling against EM the past week and continued even faster overnight with USDBRL down 1%, USDKRW close again to the lows of 1060.


Foreign exchange movements

ghg



  • The move in USDJPY triggered a lot of buying in gamma and back at 105.50 on risk off
  • The trade war should be very negative for CAD and there was a lot of buying interest at the break of 1.2900 in spot

Rates
gh

 
  • Gilts were sold off after Prime Minister Theresa May said a Brexit deal is close and market concerns are slightly eased.
  • Bunds first being bid in risk off move, and paired gains as Italy BTP slumped in reaction to the election result.
  • US treasuries were range bounding in the earlier session as investors were waiting for pricing of CVS’s $40bn bond sale. It paired the gains into the close as Trump was reported to be open for tariff changes spurred rally in risk assets. However this morning Trump stands firmly on the tariffs and says he will widen the tariffs to China as well, has driven futures to dip lower.

 

Commodities

ggh

 
ghgh



ghg



United States

  • The Dow (+9 points) and S&P 500 (+7 points) closed slightly higher, as the prospect of talks between North Korea and the United States and increasing resistance to President Donald Trump's proposed metals tariffs encouraged risk appetite among investors.
  • Qualcomm Inc (QCOM) fell 2.9% to 62.14 as Broadcom Ltd (AVGO) continued to woo the US company’s investors to agree to a hostile takeover. Department of Treasury is looking into the company’s request to review Broadcom’s bid amid concerns over potential national security risks. Shares of AVGO were up 1.6% to 250.96.
  • In retail, Target Corporation (TGT) fell around 4.5% to 71.79 after the big-box retailer reported lower-than-expected profit for the holiday quarter. TGT sales increased 10% year over year to $22.8 billion, including a 3.6% jump in comparable-store sales. On the bottom line, that translated to adjusted earnings of $1.37 per share, above the midpoint of the company's guidance.
  • Memory-chip maker Micron Technology (MU) is on a bullish noted. Shares prices were up 1.71 and closed at 53.74 making an upside breakout for further gains. Looking at the daily bar chart of MU, we can see that MU made that test of the rising 200-day line and a few weeks latter broke out to a new high. Prices are bullishly positioned above the rising 50-day line and the 200-day average. Upcoming earnings report on March 22 will be a good one, according to Goldman Sachs analyst, but there are some twists and turns, an options strategy to play the upside as an alternative can be considered.


Europe

  • Europe ended slightly higher despite Italy uncertainty and US tariff concerns. FTSE up 30 points and Dax was up 23 points. Autos stocks came under pressure during trade after President Donald Trump threatened European car makers with a tax on imports if the EU moved to retaliate over his plan to impose a tariff on steel and aluminium imports.
  • In auto-sector news, autos were one of the top performers, rising 1.24% following comments from German automaker Volkswagen (VOW3), who said that its deliveries rose 5% last month. The stock rose 2.25% to EUR 157.00.
  • Food & Beverage was one of the worst-performing sectors, with online food ordering group Just Eat (JE), ending down 12.5% to £744.80. The company sank after it released results that disappointed the markets, announcing a core earnings outlook that came in below consensus.

 

Hong Kong

  • Hang Seng Index (HSI) spiked over 730 points after midday trading to hit peak at 30,620. At close, the benchmark index leaped 624 pts or 2.1% to 30,510 points.
  • Three oil giants ended the weak trend and outperformed the market. CNOOC (883.HK) snapped a five-day decline and reclaimed above the 100-day moving average line ($11.2) and last traded at $11.26, with a gain of 4.4% after it topped the highest point of $11.36, facing pressure near the 10-day moving average line. 
  • Petrochina (857.HK) elevated above the 250-day moving average and rebounded 2.7% to $5.38. Sinopec Corp (386.HK) snapped the five-day drop and last traded at $6.25, up 2.3%.
  • China Military budget grew for the first time in five years to 8.1%. Riding on the news thematic play stocks like Avichina (2357.HK) once reached above the highest level of $5.04 which was recorded last October and topped at $5.13, over a nine-month high. The stock last traded at $5.01, up 12%, with a volume soaring to 104 million shares, over a 2.5-year high.
  • Blue-chippers almost all rose. Tencent (700.HK) went up 3.2% as Tencent's chairman Ma Huateng said the company would consider A-share listing when the conditions become ripe.


hjhjh

 You're ... leaving. The latest to resign from the Trump administration is chief economic adviser Gary Cohn. Asian markets fell following the news. Photo: Shutterstock

 
– Edited by Gayle Bryant


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. 

All material contained herein is provided for your general information. The information and commentaries are not intended to be and do not constitute financial advice, investment advice, trading advice or any other advice or recommendation of any sort offered or endorsed by Saxo Capital Markets Pte. Ltd. (“SCM SG”). Any expression of opinion (which may be subject to change without notice) is personal to the presenter and/or author; they do not reflect the view or opinion of SCM SG or its affiliates, neither do they constitute an endorsement of SCM SG’s view or analysis of the same.

None of the information contained here constitutes an offer to purchase or sell a financial instrument, or to make any investments. SCM SG does not take into account your personal investment objectives or financial situation and makes no representation and assumes no liability as to the accuracy or completeness of the information nor for any loss arising from any investment based on any commentaries or information provided here.
For further information, please click here.  


Saxo Capital Markets Pte Ltd ("Saxo Capital Markets") is a licensed subsidiary of Saxo Bank A/S, an online trading and investment specialist. Saxo Capital Markets serves as the APAC headquarters and holds a capital markets services licence under the Monetary Authority of Singapore; and a commodity broker licence issued by the International Enterprise Singapore. Clients can trade Forex, CFDs, Stocks, Futures, Options and other derivatives via SaxoWebTrader and SaxoTrader, the leading multi-asset online trading platforms.
Trading risks are magnified by leverage - losses can exceed your deposits. Trade only after you have acknowledged and accepted the risks. You should carefully consider whether trading in leveraged products is appropriate for you based on your financial circumstances. Please consider our Risk Warning and General Business Terms before trading with us. Please see full General Disclaimer.

Thousands of serious traders receive free news and analysis from Saxo Capital Markets each day. Saxo Capital Markets never sends these emails unsolicited; they are sent following acceptance of your membership and subscription request by Saxo Capital Markets at saxomarkets.com.sg. If you do not wish to receive any emails from Saxo Capital Markets in the future, please reply to this email with the word "UNSUBSCRIBE" in the subject header.

Copyright | Disclaimer | Risk Warning | Privacy Policy | Contact Us
Samsung Hub | 3 Church Street | # 30-01 | Singapore 049483
Company No. 200601141M

Disclaimer

The Saxo Bank Group entities each provide execution-only service and access to Tradingfloor.com permitting a person to view and/or use content available on or via the website is not intended to and does not change or expand on this. Such access and use are at all times subject to (i) The Terms of Use; (ii) Full Disclaimer; (iii) The Risk Warning; (iv) the Rules of Engagement and (v) Notices applying to Tradingfloor.com and/or its content in addition (where relevant) to the terms governing the use of hyperlinks on the website of a member of the Saxo Bank Group by which access to Tradingfloor.com is gained. Such content is therefore provided as no more than information. In particular no advice is intended to be provided or to be relied on as provided nor endorsed by any Saxo Bank Group entity; nor is it to be construed as solicitation or an incentive provided to subscribe for or sell or purchase any financial instrument. All trading or investments you make must be pursuant to your own unprompted and informed self-directed decision. As such no Saxo Bank Group entity will have or be liable for any losses that you may sustain as a result of any investment decision made in reliance on information which is available on Tradingfloor.com or as a result of the use of the Tradingfloor.com. Orders given and trades effected are deemed intended to be given or effected for the account of the customer with the Saxo Bank Group entity operating in the jurisdiction in which the customer resides and/or with whom the customer opened and maintains his/her trading account. When trading through Tradingfloor.com your contracting Saxo Bank Group entity will be the counterparty to any trading entered into by you. Tradingfloor.com does not contain (and should not be construed as containing) financial, investment, tax or trading advice or advice of any sort offered, recommended or endorsed by Saxo Bank Group and should not be construed as a record of ourtrading prices, or as an offer, incentive or solicitation for the subscription, sale or purchase in any financial instrument. To the extent that any content is construed as investment research, you must note and accept that the content was not intended to and has not been prepared in accordance with legal requirements designed to promote the independence of investment research and as such, would be considered as a marketing communication under relevant laws. Please read our disclaimers:
- Notification on Non-Independent Invetment Research
- Full disclaimer
- 沪ICP备13028953号-1

Check your inbox for a mail from us to fully activate your profile. No mail? Have us re-send your verification mail