Morning Report APAC: Trump talk puts market to the sword
- JPY strengthens for the fourth day running, Japanese shares tumble
- Yen rises 0.2% to trade at 108.83 to the USD in early Tokyo trade
- US Treasury yields fall to lowest this year in reaction to Trump's USD talk
- US stocks decline and volatility rises across asset classes
- WTI crude rose 0.3% to $52.95/barrel, gold remains flat
- Iron ore delivery price tumbled 8.5% to $68.04/tonne
By Saxo APAC Sales Trading
US: In a published interview with the Wall Street Journal, President Donald Trump said the US dollar “is getting too strong” and that his administration would not label China a currency manipulator. As for the Fed Chair Janet Yellen, he said she was “not toast” in 2018.
“I think our dollar is getting too strong, and partially that’s my fault because people have confidence in me. But that’s hurting - that will hurt ultimately,” the President said.
He said the reason he has changed his tune on one of his core campaign promises relating to China and its currency is that China had not manipulated the Yuan for months.
“They’re not currency manipulators,” the President said. Finally the President left open the possibility of renominating chair Yellen when her tenure is up next year. Asked if she was “toast” when her term ends in 2018, the President said: “No, not toast. I like her, I respect her.”
Import prices had their largest decline in seven months to -0.2% month-on-month as expected. Prices for imported petroleum sank 3.6%, the biggest drop since August. Import prices ex-petroleum rose 0.2% (market estimate: 0%).
The US annual budget deficit held close to its highest level in three years during March. The deficit totaled $176.2 billion (market estimate: $169bn), up sharply from the $108bn deficit in February. For the first six months of the fiscal year, the deficit is around 15% wider year-on-year.
Singapore: Singapore's first quarter GDP was -1.9% quarter on quarter on an annualised basis (estimate -1.8%).
The Singapore Monetary Authority says it has decided to keeps the zero appreciation path for the Singapore dollar and will maintain the width and the centre of its currency band. It says neutral policy stance will be needed for an extended period.
USD was well offered after Trump said he was favouring a weak USD and the US yields followed through with his comments on low rates.
USDJPY continues his drop after the 110 break and we are now trading at the 200 Day Moving Average, which is not a major support. The next big support is at 105.
Emerging Markets: USDZAR collapsed after the speaker of the National Assembly has decided to postpone debate and vote on a motion of no confidence in President Jacob Zuma that was scheduled for April 18. The rest of the emerging markets were offered following the global USD move.
Foreign exchange movements
The market is still extremely skewed to the downside for the first and second round of the French elections with the market pricing a 5%-6% move to the downside in EURUSD.
USDJPY Gamma remains very bid following the spot move.
US Treasuries rallied on Trump’s comments that he liked the Fed’s low-interest rate policy and is open to re-nominating Yellen.
French bonds led most EGBs higher, narrowing from the widest 10 year yield gap against Germany for first day in four, as centre-right candidate Francois Fillon advanced in the latest French presidential election poll.
Further volatility was introduced yesterday after comments from President Trump that the USD was too high and would open the possibility of renominating Fed chair Janet Yellen.
Financials were the biggest loser with US financials ETF (IYF) lost 0.72%.
All three US indices were in the red but while safe haven assets (gold and JPY) have been steadily rising since last week, equities are still fairly resistant. Lastly, it is the first time S&P has closed below the 50 DMA since Trump has been in power.
Qualcomm on Wednesday said it was ordered to refund $814.9 million in patent royalties paid by BlackBerry, the latest in a string of setbacks to the chip maker’s intellectual property licensing business. Qualcomm share price was down 3.54% while BlackBerry rose 16%.
Tesla shares broke below $300, down 3.85% as five investment groups penned a letter Monday asking for more independent board members who don't have personal ties to Musk to "provide a critical check" on possible dysfunctional group dynamics.
Elon Musk defended his and had stated his intention to bring on more independent board members during the merger with SolarCity. He also tweeted that disgruntled investors of Tesla should buy Ford which has a "good" governance.
On the technical side, Tesla also retreated after touching the upwards channel.
- Beijing Airport (694 HK): Cut to sell at Morningstar
- BOE Tech (200725 CH): Rated new buy at GF Secs
- China Vanke (000002 CH): Raised to neutral at Goldman
- Fiyta Holdings (200026 CH): new buy at GF Secs
- Gemdale (600383 CH): Raised to neutral at Goldman
- Longfor Prop (960 HK): Rated new buy at China Merchants
- KWG Property (1813 HK): Raised to buy at Goldman
- Shanghai Shimao (600823 CH): Cut to sell at Goldman
- Tangshan Sanyou (600409 CH): Rated new buy at Qilu Securities
- Wasion Group (000776 CH): Cut to hold at Guangfa Securities
- Coal: China said to ask power utilities for coal-price talks: Reuters
- Refiners: China to raise fuel prices from Thursday: NDRC
- 361 Degrees (1361 HK): 4Q trade fair order value rises by low double-digits
- BBMG (2009 HK): A shares to halt after jump, H shares to keep trading
- Beijing Capital Dev. (600376 CH): FY net 1.9b yuan vs 2.08b yuan yr ago
- BOC (3988 HK): to start Angolan operations after August
- Cathay (293 HK): Names Rupert Hogg as CEO
- China Hongqiao (1378 HK): Said to obtain waiver for $700m loan
- China Machinery Eng (1829 HK): Wins $282m power plant contract
- China Pacific Ins. (601601 CH): Chairman resigns on job change
- China Resources Land (1109 HK): March contract sales 11.9b yuan; agrees to terms to buy ICBC’s London HQ: Estates Gazette
- China State Const (601668 CH): FY net income misses est.
- CK Property (1113 HK): Bought back 686,000 shares for HK$37.4m April 12
- Chow Tai Fook (1929 HK): 3-month H.K., Macau same-store sales rise 4% y/y
- Fosun (656 HK): Plans to sign deal for stake in Polyus: IFX
- Fushun Special Steel (600399): Dominant shareholder defaults on bond amid restructuring
- Ganfeng Lithium (002460 CH): FY net 464.4m yuan vs 125.2m yuan yr ago
- Ping An (2318 HK): Shanghai bourse probes trading of shares; Jan.-March life insurance premiums 157.3b yuan
- Pudong Bank (600000 CH): Chairman Ji Xiaohui to retire
- Prada (1913 HK): FY net income misses est.
- Rusal (486 HK): Said to hold meetings to sell 2nd portion of Panda bonds
- Sanan Optoelectronics (600703 CH): FY net 2.17b yuan vs 1.69b yuan year ago
- Shanghai Bairun (002568 CH): FY net loss 147m yuan
- Shenzhen Energy (000027 CH): Canadian solar unit sells 2 solar plants in China for $99.8m
- Aisin Seiki (7259): Cut to equal-weight at Morgan Stanley
- Bic Camera (3048): Raised to neutral at Storm Research
- Nippo Corp. (1881): Cut to neutral from outperform at Daiwa
- Nipro (8086): Raised to overweight from neutral at Mitsubishi UFJ-MS
- Renesas (6723): Cut to neutral at JPMorgan
- Shizuoka Bank (8355): Raised to neutral at UBS
- Yondoshi (8008): Cut to neutral plus from outperform at Iwai Cosmo
- Aeon Co. (8267): Forecasts operating profit +5.6% to 195b yen for current fiscal year; books 40b yen writedown of fixed assets in the year ended Feb.
- Aeon Delight (9787): Forecasts operating profit +4.3% to 18b yen for current fiscal year
- Aeon Fantasy (4343): Forecasts operating profit +11% to 4.2b yen for current fiscal year
- Best Denki (8175): Yamada Denki (9831) to pay 0.28 share for each Best Denki share in buyout (no premium based on Wed. close)
- Cosmos Pharmaceutical (3349): 9-month operating profit +29% to 17.4b yen
- Dip (2379): Forecasts full-year parent operating profit +15% to 10.5b yen
- Fujitsu (6702): Fujitsu Technology & Business of America Inc. loses early bid to toss 401(k) fee lawsuit
- Hogy Medical (3593): Forecasts operating profit -29% to 5.3b yen for current fiscal year
- Lawson (2651): Forecasts operating profit -7.1% to 68.5b yen for current fiscal year; analyst est. 74.2b yen
- Maruei Department Store (8245): Largest holder Kowa offers 128 yen/share in tender offer vs Wed. close of 80 yen
- Ministop (9946): Forecasts operating profit +37% to 1.7b yen for current fiscal year
- Mitsubishi Tanabe Pharma (4508): Patent claims for Novartis AG and Mitsubishi Tanabe Pharma’s Gilenya multiple sclerosis drug are invalid, a federal appeals court ruled
- Nidec (6594): Nagamori seeks new president in three years, Nikkei Sangyo reports
- Ryohin Keikaku (7453): Forecasts operating profit +11% to 42.3b yen for current fiscal year; to buy back 0.38% of shares
- Saizeriya (7581): Raises full-year operating profit forecast 18% to 11b yen after 1H beat
- Sony (6758): Patent complaint against Arris probed by U.S. agency
- Solekia (9867): Beji Sasaki raises bid to 5,300 yen/share, topping Fujitsu’s (6702) latest offer of 5,000 yen
- Star Micronics (7718): Forecasts operating profit +28% to 4.6b yen for current fiscal year
- Sumitomo Heavy (6302): Acquires Persimmon Technologies
- Toshiba (6502): Western Digital is opposing Toshiba’s planned sale of its memory chip business because it violates an existing joint venture agreement between the companies, Toshiba executives said on Tuesday
- Broadcom said to offer 2.5t yen for Toshiba chip unit: Reuters
- Toshiba said to have narrowed bids for chips to four: Yomiuri
- Co.’s large construction license may not be renewed: Sankei
- Welcia Holdings (3141): Forecasts operating profit +9.2% to 26.3b yen for current fiscal year
- Aurizon (AZJ): Cut to sell at Goldman, PT A$4.66
- Galaxy Resources (GXY): Raised to neutral at Macquarie, PT A$0.46
- GR Engineering Services (GNG): Raised to buy at Argonaut Securities, PT A$1.75
- Independence Group (IGO): Raised to outperform at Macquarie, PT A$4.10
- Sundance Energy (SEA): Rated new buy at Stifel, PT A$12
- Z Energy (ZEL): Raised to buy at Goldman, PT NZD8.25
- Iron ore drops most in year as ‘bearish’ Goldman flags losses
- Ex-dividend: TPG Telecom
- ASX (ASX): Proposes bidder shareholder approval for reverse takeovers
- BHP Billiton (BHP): BHP CEO rejects oil spinoff for third time after Singer demand
- Cimic Group (CIM): Annual meeting scheduled; Co. also likely to provide 1Q update; NOTE: Cimic in Feb. forecast 2017 NPAT A$640m-A$700m
- Crown Resorts (CWN): Benjamin Brazil resigns as a director
- CSL (CSL): Goldman, Citi tell clients to buy Shire ahead of HAE trial data
- Fortescue (FMG): 3Q production report expected; NOTE: Co. in February forecast FY17 shipping target 165mt-170mt, cash cost target $12-$13wmt
- Investa Office (IOF): Presents operational, governance review
- Macquarie Atlas (MQA): Annual meeting scheduled; NOTE: Co. in Feb. forecast 2017 distribution A$0.20/share; 1H A$0.10/share
- Newcrest (NCM), Northern Star (NST), Evolution (EVN), Saracen (SAR), Regis Resources (RRL), Resolute Mining (RSG), OZ Minerals (OZL): Political risks push gold to five-month high on haven demand
- Qantas Airways (QAN): Australia’s air safety watchdog investigating after 15 people injured on Melbourne-Hong Kong flight last week: SMH
- Rio Tinto (RIO): Still in talks with regulators on Guinea, Mozambique probes
- Spotless Group (SPO), Downer EDI (DOW): Advancing talks of potential superior plan to Downer’s
- Transurban (TCL): March traffic data expected
- Treasury Wine (TWE): Sorry Australia, Americans prefer pricier New Zealand wines
- Unilife (UNS): Files for bankruptcy protection in Delaware
- Whitehaven Coal (WHC): 3Q production report expected; NOTE: Co. in February forecast FY total output 21mt-22mt
- Woodside (WPL), WorleyParsons (WOR), Oil Search (OSH), Beach Energy (BPT), Karoon (KAR), Origin Energy (ORG), Santos (STO): Oil retreats as U.S. production gain offsets stockpile decline
- Bank of New York Australia ADR Index -2.1%
- BHP Billiton ADR -4.7%, most since Sept. 13, to A$24.29 equivalent, 4.1% discount to last Sydney close
- Rio Tinto ADR -5.2%, most since July 19, to A$52.16 equivalent, ~16% discount to last Sydney close
- Companies trading above 20/50/200 DMAs, Bollinger upper band with RSI above 70: NCM, JHX, WOR, BTT, DXS, GMG, GPT, SGP, SKC, MGR
- Companies trading below 20/50/200 DMAs, Bollinger lower band with RSI below 30: TLS, VOC
– Edited by Adam Courtenay
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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