Today's edition of the Saxo Morning Call features the SaxoStrats team discussing the continuing weakness of the US dollar as commodity prices recover ground and in the wake of key US equity indices hitting all-time highs Thursday.
Article / 21 February 2017 at 1:43 GMT

Morning Report APAC: US closed for Presidents' Day; Le Pen gains

APAC Sales Trading Desk / Saxo Capital Markets

  • US markets closed for Presidents' Day
  • US Vice-President Mike Pence meets with European leaders
  • French polls show Marine Le Pen gaining in popularity 
  • GBP is the best-performing currency in the G10 on a quiet day
  • Unilever's share price collapses as Kraft Heinz withdraws $143bn takeover bid


By Saxo APAC Sales Trading

Economic data of the day (Singapore Time)



 0830: AU –RBA February meeting minutes

1800: UK – Bank of England Governor Mark Carney speaks in UK parliament 

2150: US – US Federal Reserve’s Neel Kashkari speaks on economy in Golden Valley 

0100: US – Fed’s Patrick Harker to speak on economic outlook 

0530: AU – RBA’s Philip Lowe speech in Sydney

Overnight news

US:  A quiet overnight session with both the US and Canada closed yesterday. 

Vice-President Mike Pence met with European leaders and uttered assurances that the US remains wholeheartedly committed to Nato. Donald Tusk welcomed the news but offered a slightly barbed thank-you, saying the “US and Europe must simply practise what they preach”. 
Europe:  German PPI data beat expectations at 2.4% year on year versus 2% expected, up from just 1% prior. 

A recent poll shows Angela Merkel’s CDU behind rival party SPD in Germany. Martin Shulz has surged in popularity by 12 points since taking leadership of the SPD  a month ago. This is the first time the party has lead the CDU since 2006. 

French polls show Marine Le Pen gaining in popularity. While she remains behind all her rivals when it comes to the second-round run-off the margin is narrowing rapidly. Currently, an Emmanuel Macron versus Le Pen run-off is seen at 52% vs 48%, but that was 63% vs 37% just weeks ago.




USD: A quiet session in tight ranges with little news flow to excite traders.

GBP: The best-performing currency in the G10 space on a quiet day, driven by what looks like an easier path than expected as Brexit is debated in the House of Lords.

Emerging markets: RUB was the best-performing EM currency. It was interesting to see the move in the PHP, where spot broke above the key 50 level and weakened nearly 0.5%. The move prompted the central bank to comment on the currency, stating it is watching volatility and comparisons to regional peers.

Foreign exchange movements


A particularly quiet session yesterday with recent market trends continuing. EUR volatility remains bid on French election developments and will continue to be should polls show further Le Pen advance.

CNH volatility selling has stabilised in line with spot. Very little to report outside of this.



US bond markets were closed.

The yield spread between 10-year Greek bonds and German bunds narrowed further as investors see efforts of Greece trying to regain access to public debt.







The US market was closed on Monday for Presidents' Day. 

European markets finished mixed as the DAX gained 0.60%, while France's CAC 40 was off 0.05%. Shares in London were unchanged with the FTSE 100 at 7,299.86. 

A 3% gain in Deutsche Telekom helped push the index higher after a Reuters report that Japan's SoftBank is prepared to give up control of Sprint to Deutsche Telekom's T-Mobile US to clinch a merger of the two US wireless carriers. 

Royal Bank of Scotland was up 6.8% and is the day's biggest gainer as shareholders welcomed a plan to scrap the proposed sale of its Williams & Glyn unit. 

Meanwhile, the Unilever share price collapsed 7.8% after as Kraft Heinz withdrew its $143bn takeover bid.

Asia-Pacific stocks

Hong Kong

Analyst Ratings: 

  •  APT Satellite (1045 HK): Raised to neutral at Haitong 
  •  Belle Intl (1880 HK): Raised to outperform at Credit Suisse 
  •  HKEx (388 HK): Raised to buy at CICC 
  •  StanChart (2888 HK): Cut to underweight at Santander 
  • Sun Art Retail (6808 HK): Cut to underweight at JPMorgan 


  •  Nuclear power: China reactor faced emergency in 2008: Radio 
  •  China Hi-Tech Group (600730 CH) says chairman resigns 
  •  China Unicom (762 HK): End January subscribers 407.1m 
  •  Do-Fluoride (002407 CH): Terminates share sale plan after CSRC tightens rules 
  •  Guotai Junan Securities (601211 CH): FY net 9.84bn yuan vs 15.7bn yuan year ago 
  •  Shandong Gold Mining (600547 HK): Said to plan up to $1bn Hong Kong share sale 
  •  Shuangliang Eco-Energy (600481 CH): To remain suspended 
  •  Sino Hydro (601669 CH): Wins Pakistan $400m power dam bid with Sapphire Electric 
  •  Tencent (700 HK): Chinese game site said to seek funds at $1.2bn valuation 


Analyst Ratings: 

  •  Nippo Corp. (1881): Cut to neutral from buy at Ichiyoshi Research 
  •  Yorozu Corp. (7294): Raised to neutral from sell at Ichiyoshi Research 
  •  Tsumura & Co. (4540): Raised to strong buy from buy at SBI Securities 


  •  Dai-ichi Life Holdings (8750): To form pact with Nihon Chouzai (3341) 
  •  Denso (6902): To reduce the number of members on its board of directors 
  •  Don Quijote Holdings (7532): Registers to sell up to 100bn yen of bonds 
  •  Honda Motor (7267), Yamaha Motor (7272): Indonesia’s antitrust commission, or KPPU, says Astra Honda Motor and Yamaha Indonesia Motor Manufacturing guilty of cartel activity in automatic-scooter sales, imposes fines 
  •  JX Holdings (5020): Lowers February crude processing volume to 4.75m kls from previously planned 4.97m kls, due to malfunction at refinery, Rim Intelligence says 
  •  Konica Minolta (4902): Downgraded to underperform from neutral at SMBC Nikko Securities 
  •  Mitsui & Co. (8031): To invest between $450m and $550m in LA- based real estate and infrastructure fund management company CIM Group 
  •  Ogaki Kyoritsu Bank (8361): To sell shares to public; seeks about 30.2bn yen from share sale 
  •  Orix JREIT (8954): To sell shares to public for 168,850 yen each; expects net proceeds of as much as 25.4bn yen 
  •  Shikoku Electric Power (9507): Lifts full-year operating profit forecast by 67% to 17.5bn yen 
  •  Sumitomo Mitsui Financial Group Inc. (8316): Is considering selling its stakes in two Japanese regional banks to Resona Holdings Inc., according to people with knowledge of the situation 
  •  Takagi Securities (8625): Tokai Tokyo offers 21% premium from Monday closing price for Takagi Securities in tender 
  •  Toshiba (6502): Sale of Toshiba’s chip business would be an issue of national interest, Nikkei reports, citing Japan business lobby Keidanren head Sadayuki Sakakibara 
  •  Sakura Internet (3778): Seeks to raise 3.21bn yen from public share sale 
  •  Taisei Lamick (4994): Seeks to raise 2.12bn yen from public share sale 
  •  Solasia Pharma (4597): To list on Tokyo’s Mothers Market March 24; Itochu (8001) is Solasia’s largest shareholder 


Analyst Ratings: 

  •  Beach Energy (BPT): Raised to buy at Canaccord, PT A$0.83 
  •  Bluescope (BSL): Raised to outperform at Credit Suisse, PT A$13.30; Cut to neutral at JPMorgan, PT A$13 
  •  Brambles (BXB): Cut to neutral at Macquarie, PT A$10.25; Cut to hold at Morgans Financial, PT A$9.72 
  •  Cabcharge (CAB): Cut to neutral at UBS, PT A$3.95 
  •  GWA Group (GWA): Cut to underperform at Macquarie, PT A$2.60 
  •  Mantra Group (MTR): Raised to buy at UBS, PT A$3.15 
  •  NIB Holdings (NHF): Raised to neutral at Credit Suisse, PT A$5.50 
  •  Northern Star (NST): Cut to hold at Canaccord, PT A$4.40 
  •  Ooh!Media (OML): Cut to hold at Canaccord, PT A$5 
  •  WorleyParsons (WOR): Cut to underperform at Macquarie, PT A$8.28; Cut to neutral at Credit Suisse, PT A$8.50 


  •  Aconex (ACX): 1H results expected; NOTE: Co. last month forecast 1H Ebitda A$6.3m-A$7.3m; rev. A$76.5m-A$77.5m 
  •  Altium (ALU): 1H results expected; NOTE: Co. in November forecast FY17 sales, rev. growth more than 10%; oper margin over 30% 
  •  ANZ Bank (ANZ), Commonwealth Bank (CBA), National Australia Bank (NAB), Westpac (WBC): Australian banks pick a number to present earnings: Gadfly 
  •  BHP Billiton (BHP): 1H results expected after market closes; NOTE: Adj. net income est. $2..943b (6 analysts); Preview; Escondida union to attend mediation with strike in 12th day 
  •  Boral (BLD): Trades ex-div. 
  •  Caltex (CTX): FY results expected; NOTE: Co. in December forecast RCOP NPAT A$500m-A$520m; Historical cost profit A$560m-A$580m 
  •  Cromwell Property Group (CMW): Sees value in Investa up to A$4.75 per IOF share 
  •  Domino’s Pizza (DMP): Trades ex-div. 
  •  Fairfax media (FXJ), REA Group (REA): Fairfax seriously considering IPO of online real estate business Domain; NOTE: Fairfax scheduled to release results Feb. 22 
  •  Flexigroup (FXL): 1H results; NOTE: Co. in November forecast FY17 cash NPAT A$90-$97m 
  •  Fortescue (FMG), Rio Tinto Ltd (RIO): Iron may swap fireworks for slow decline as supply in focus 
  •  Greencross (GXL): 1H results expected; NOTE: Co. in August forecast FY17 NPAT, underlying Ebitda growth at similar levels to FY16 
  •  Growthpoint (GOZ): 1H results expected; NOTE: 2-analyst adj. net income est. A$70.2m 
  •  Independence Group (IGO): 1H results expected; NOTE: Rev. est. A$230.3m (3 analysts) 
  •  IPH (IPH): Trades ex-dividend 
  •  Magellan Financial (MFG): Trades ex-dividend 
  •  Monadelphous Group (MND): 1H results expected; NOTE: 2-analyst rev. est. A$613m 
  •  Oil Search (OSH): FY results expected; NOTE: Adj. net income est. A$107.3m (16 analysts) 
  •  Sandfire Resources (SFR): 1H results expected; NOTE: Adj. net income est. A$39m (3 analysts) 
  •  Scentre Group (SCG): FY results expected; NOTE: FFO/share est. A$0.232 (8 analysts) 
  •  Seek (SEK): 1H results expected; NOTE: 2-analyst rev. est. A$499.5m 
  •  Star Entertainment (SGR): Trades ex-dividend 
  •  Suncorp (SUN): Trades ex-dividend 
  •  Terracom (TER): Gets indicative approval for Blair Athol Mine transfer 
  •  Virtus Health (VRT): 1H results expected; NOTE: Co. last month warned volume decline may have material effect on results


 EUR volatility remains bid and will continue to be should polls show further Le Pen advance. Photo: Shutterstock


– Edited by Susan McDonald

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