Morning Report APAC: US air strike puts oil, gold back on the radar
- US strike on Syria a retaliation for civilian gas attacks - market softens
- Brent crude futures jump 72c to $55.60/barrel at 0146 GMT
- Focus will turn to the US jobs report after strong payrolls data
- Payroll data forecasts are for a gain of around 180,000 jobs in March
By Saxo APAC Sales Trading
Economic data of the day (Singapore Time: GMT plus 8 hours)
- 17:00: UK – Bank of England governor Mark Carney speaks in London
- 22:00: CA – Bank of Canada governor Stephen Poloz unveils new bank note
- 00:15: US – Fed’s William Dudley speaks on financial regulation in New York
US: Initial jobless claims for the week ended April 1 dropped more than expected (actual 234,000, consensus 250,000), it is the biggest drop in almost two years. Continuing claims also fell more than expected.
US President Donald Trump is meeting with China’s President Xi Jinping in Florida on Thursday and Friday. The bilateral talks between the two economic powerhouses are expected to focus on the key points of geopolitics and trade relations.
Europe: ECM March meeting minutes focused on communication and forward guidance on rates, however the minutes revealed an increasing divergence in views regarding the outlook for inflation.
German manufacturing orders rose 3.4% in February lower than market consensus of 4% and it is only driven by domestic demand as foreign demand was flat.
EURUSD was sold off as dovish comments from ECB President Mario Draghi and chief economist Peter Praet dampened market’s expectation on early ending of its monetary easing.
CZK experienced significant volatilities after its central bank ends EURCZK floor, which surprised the market. CZK closed around 1.4 stronger against the EUR.
Foreign exchange movements
EUR skew risk premium on the downside is priced higher as one month roll over on French election is getting more expensive, reflecting the market is looking to hedge more for EUR on the downside.
US Treasuries fell as traders awaited March US payroll data, while European core bonds initially rallied after Mario Draghi's comments, but left little changed heading into the close.
French bonds outperformed core by around 2 basis points across the curve.
US stocks ended off day highs ahead of a summit between US President Donald Trump and his Chinese counterpart Xi Jinping, while sentiments remained cautious as investors awaited nonfarm payrolls data due on Friday.
Constellation Brands moved higher after reported stronger fourth-quarter earnings on Thursday, which it attributed to gains in high-end whiskey sales. Shares jumped 6.4%.
Twitter shares fell more than 1% following the news that Twitter co-founder Evan Williams is selling 30% of his shares in the social media company he helped start.
Unilever gained 1% after saying it would launch a €5 billion share buyback program this year, raise its dividend by 12%, and divest its spreads division. The moves come as a result of a strategic review after Unilever rejected a $143 billion takeover offer from Kraft Heinz.
BTG added 2.5% as the pharmaceutical group, whose drugs include a treatment for varicose veins, said it expects fiscal 2017 revenue will come in at or above the top end of expectations.
Asia Pacific equities preview
Hong Kong analyst views
- BBMG (2009 HK) A shares raised to hold at HSBC
- BTG Hotels (600258 CH): Raised to buy at Chang Jiang
- CRRC Times Electric (3898 HK) H shares cut to accumulate at GuoTai JunAn
- China Coal (1898 HK): A shares raised to neutral at JPMorgan
- Imperial Pacific (1076 HK): Downgraded on cash flow concerns, Moody’s says
- New China Life (601336 CH) H shares raised to equal-weight at Morgan Stanley
- Tsingtao Brewery (168 HK): Raised to neutral at Haitong Intl
- Zhuzhou CRRC Times Electric (3898 HK): Downgraded to accumulate at Guotai Junan
Hong Kong stocks
- Insurance industry: China to unveil plan to boost Shanghai insurance industry: News
- Beijing Hyundai (1958 HK) says Korea’s Thaad deployment hurt sentiment
- CC Securities (1375 HK): Plans to sell up to 2.7b yuan convertible bonds
- Central China Securities (601375 CH, 1375 HK): Plans to sell up to 2.8b yuan convertible bonds
- Cheung Kong Property (1113 HK): buys back 5.5m shares for HK$296.2m
- China Fortune Land (600340 CH): Plans to sell up to $1b bonds overseas
- China Railway Consortium (390 HK): Gets Jakarta-Bandung rail project pact
- GCL-Poly Energy (3800 HK): Plans about 5.68b yuan plant project in Xinjiang
- Legend Holdings (3396 HK): Aims to buy finance business licenses, increase finance assets, chairman says: Daily
- Longfor Properties (960 HK): Unaudited March contract sales 43b yuan
- Shui On Land (272 HK): Jan.-March contract property sales 986m yuan
- Yingde Gases (2168 HK): Says PAGAC cash offer becomes unconditional
- Zoomlion (000157 CH): Sees 1Q net of 50m-100m yuan vs 660m yuan loss year ago
Japan analyst views
- Brother Industries (6448): Raged new overweight at MUFJ-MS
- Cyberdyne (7779): Rated new outperform at Daiwa, PT 2,080 yen
- Fukuoka Financial (8354): Raised to neutral at Credit Suisse
- Hamakyorex (9037): Cut to neutral at Daiwa, PT 2,230 yen
- IHI (7013): Rated new buy at Jefferies
- Kawasaki Heavy Industries (7012): Rated new underperform at Jefferies
- Mitsubishi Heavy Industries (7011): Rated new hold at Jefferies
- Murata (6981): Raised to buy at Morningstar
- Nachi-Fujikoshi (6474): Raised to outperform from neutral plus at Iwai Cosmo
- Nippon Gas (8174): Rated new overweight at JPMorgan
- Nomura (8604): Cut to neutral at BofAML
- Osaka Gas (9532), Tokyo Gas (9531): Rated new neutral at JPMorgan
- Screen Holdings (7735): Downgraded to neutral from outperform at Macquarie
- C’sMEN (3083): To sell 185,400 shares for 493 yen each to NCXX Group
- Honda Motor (7267): China March sales +14.6% y/y
- McDonald’s Holdings Co. Japan (2702): March same-store sales +16.5% y/y helped by new type of teriyaki beef and scrambled egg sandwich
- Seven & i Holdings (3382): Agreed to acquire U.S. Sunoco LP retail shops and gasoline businesses for $3.3 billion
- Skylark (3197): March same-store sales rise 1.3% y/y
- Steel companies: Crude steel output in Japan seen falling 0.8% y/y in April-June period from year ago, first decline in five quarters
- Toyota Motor (7203): In talks with Saudi Arabia to build car manufacturing plant in Jubail industrial city, Al Sharq Al Awsat reports
- Yamato Holdings (9064): Package handling jumped 7.9% to record last fiscal year
Australia analyst views
- South32 (S32): Cut to hold at Morgans Financial, PT A$3.14
- Kadoorie’s CLP likely to sell down stake in EnergyAustralia
- Banks look gender friendly vs male-dominated miners: Chart
- AGL Energy (AGL): Raised to buy at UBS, PT A$29.50
- BHP Billiton (BHP), Aurizon (AZJ): Coking coal jumps above $200 as Australian exports curtailed
- Estia Health (EHE), Seven Group (SVW): Kerry Stokes’s Seven boosts Estia stake as Sentinel also buys
- Fortescue (FMG): Moves to tap growing markets outside China
- Metlifecare (MEQ): Infratil to sell 19.9% stake in co. for NZ$237.9m
- Newcrest (NCM), Northern Star (NST), Evolution (EVN), Saracen (SAR), Regis Resources (RRL), Resolute Mining (RSG), OZ Minerals (OZL): Gold rises on concern over potential fallout from Trump-Xi meet
- Rio Tinto (RIO): Australia warns iron ore will tumble back into $50s on supplies
- Seek (SEK): Seek Intl/FountainVest to buy Zhaopin for $18.20/ADS
- Southern Cross Media (SXL): May be intetrested in Mediaworks’ N.Z. radio assets: AFR
- Telstra (TLS): Prices A$1b bond, proceeds for general purposes
- Westfield (WFD): Annual meeting scheduled; NOTE: Co. in Feb. forecast 2017 FFO/shr A$0.338-A$0.34; distribution A$0.255
- Whitehaven Coal (WHC): Met coal seen at 5-year high assuming ‘limited’ cyclone impact
- Woodside (WPL), WorleyParsons (WOR), Oil Search (OSH), Beach Energy (BPT), Karoon (KAR), Origin Energy (ORG), Santos (STO): Oil rises to 1-month high as OPEC cuts weighed against US glut.
– Edited by Adam Courtenay
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