Article / 24 August 2017 at 1:46 GMT

Morning Report APAC: US fiscal uncertainty weighs on Asian sentiment

APAC Sales Trading Desk / Saxo Capital Markets
Singapore

 

  • Crude made gains due to inventory drawdowns, rig evacuations
  • A Fed official again said he does not favour hiking rates until inflation picks up
  • Iron ore prices eased as steel futures fell sharply in China
  • Arabica coffee had its eight straight decline; this is its longest slump since 2013

By Saxo APAC Sales Trading

Economic data of the day (Singapore Time)

nnn

 





















Speeches (Singapore Time)

0100 – Italy: Bank of Italy governor Ignazio Visco speaks in Rimini

Overnight news, US

  • Markit PMI data showed strength in the services sector (56.9) but missed on manufacturing expectations (52.5)
  • US EIA data showed another drawdown in crude inventories. Tropical storm Harvey forced evacuations of platforms in the Gulf of Mexico. Crude traded 1.5% higher on the day.
  • Fed’s Robert Kaplan reiterated – for the fifth time in two weeks – that he is in favour of not raising rates again until evidence of further inflation pressures picks up. He has cited technology developments and labour market slack as reasons for persistently low inflation.

Overnight news, Europe

  • Markit PMI data in Europe was strong, with particular strength noted in the German manufacturing sector with a healthy 59.4 print.
  • Mario Draghi’s speech in Lindau, Germany, gave few clues as to what the governing council is thinking on monetary policy and fewer clues as to what his speech in Jackson Hole will entail.
  • Bundesbank president Jens Weidmann said he saw no reason to extend quantitative easing into 2018, adding that strength in the  euro reflects the economy recovery.
 

Foreign exchange

nnn
 















  • USD: generally weaker across the board with a couple of exceptions. USD traded softer on government shut down fears post Trumps Phoenix speech. 
  • NOK: Biggest mover in the G10 currencies as the oil rally added upside pressure to NOK.
  • NZD: wilted under growth forecast reductions and cross selling pressure. NZDUSD has formed a classic head and shoulders pattern that shows a weaker NZD may be in store.
  • Emerging Markets: High yielding currencies outperformed their low yielding peers as the USD weakened. MXN underperformed following Donald Trump's Phoenix speech, which threatened to terminate the North American Free Trade Agreement.

Foreign exchange movements
nnn













  • CNH back end vols remain quite bid, with funds buying. Downside USDCNH is increasingly becoming a trade that the smart money is looking at.
  • Jackson Hole volatility has been remarkable stable.
  • USDJPY saw increased buying of downside strikes below ¥108 in the short dates; ¥108.1 is the 2017 low.

Rates
nnn




















  • US yields were lower as treasuries were rallied overnight on the back of concerns over debt ceiling uncertainty. Weak home sales data in July weighed further on yields.
  • Core European yields were taking the spit over from US under risk off move, and headed lower. BTPs continued to struggle following the resumption of supply.

Commodities 

nnn

 

 


Equities

nnn

 














  • US stocks closed lower Wednesday on light volume, returning some of the solid gains from the previous session as investors turned cautious ahead of Jackson Hole meeting and VIX turned up 7.93% to 12.25.
  • Lowe’s ended down 3.7% after the home-improvement retailer reported adjusted earnings, missing estimates by 4cps with adjusted quarterly profit of $1.57/share.
  • Intuit Inc. dropped 1.9% after the financial software provider late Tuesday reported earnings that beat forecasts (adjusted quarterly profit of 20cps, 3cps above estimates), but also said its Chief Financial Officer R. Neil Williams will step down in January and will be replaced by Intuit finance executive Michelle Clatterbuck.
  • WPP PLC shares slumped 11% after the world’s largest advertising company releasing disappointing interim results and cut its forecast for growth for 2017, citing major slowdowns in key industries such as consumers-goods and retail.
  • Fiat Chrysler extended its gains for another 5.8% on broker upgrades from Morgan Stanley and Jefferies and despite the firm issuing a statement denying it had been approached by China's Great Wall Motor regarding its Jeep sport utility business.

Asian equities preview

Hong Kong analyst views

  • Guangzhou Auto (2238 HK): H Shares Raised to Outperform at Bernstein.
  • Health & Happiness H&H (1112 HK): Health & Happiness H&H Cut to Outperform at Daiwa; PT $HK30.
  • Rusal (486 HK): Raised to Buy at BCS, price target $9.31.
  • Xtep Int’l (1368 HK): Downgraded to Hold at HSBC; PT Lowered to $HK3.20.

Hong Kong stocks

  • Airlines: China to Allow More Airlines to Operate International Flights.
  • Casinos: Macau Casinos May Move as Island Takes Direct Hit From Typhoon.
  • Beijing Shiji (002153 CH):1H1 Net 182.5mln Yuan vs 175.7mln Yuan Year Ago.
  • China Coal (1898 HK): 1H Net 2.28bn Yuan vs 225.1mln Yuan Year Ago.
  • China Merchants Bank (600036 CH): Repo Rates Rise as PBOC Drains Funds for Third Day: Inside China.
  • China Oilfield Services (2883 HK): First Half Loss 369.5mln Yuan.
  • China Oilfield Services (2883 HK): Executive Director Dong Weiliang Resigns.
  • GD Power Development (600795 CH): H1 Net 1.69bn Yuan vs 3.67bn Yuan Year Ago.
  • Guangzhou Auto (2238 HK): First Half Net Income 6.18 bn Yuan.
  • Guotai Junan Sec (601211 CH): 1H Profit Rises 25% to HK$673.5m From Year Earlier.
  • Inner Mongolia BaoTou Steel Union (600010 CH): Baotou Steel H1 Net 587.7mln Yuan vs 27.5mln Yuan Year Ago.
  • Maanshan Steel (600808 CH): First Half Net Income 1.64bn Yuan.
  • SDIC Essence (600061 CH): SDIC Essence Holdings H1 Net 1.27bn Yuan vs 1.61bn Yuan Year Ago.
  • Samsonite (1910 HK): First Half Net Income $83.4 Mln vs $82.4mln Year Ago.
  • Shandong Weigao (1066 HK): Weigao Group H1 Net Income 650.1mln Yuan vs 385.5mln Yuan Year Ago.
  • Shui On Land (272 HK): First Half Underlying Profit 1.49bn Yuan.
  • Sinopec (386 HK): Sinopec Shanghai H1 Net 2.58bn Yuan vs 3.1bn Yuan Year Ago.
  • Yunnan Baiyao Group (000538 CH): Yunnan Baiyao H1 Net 1.57b Yuan vs 1.39bn Yuan Year Ago.

Japan analyst views

  • Cosmo Energy (5021): Cut to neutral from overweight at Mitsubishi UFJ Morgan Stanley.
  • Goldcrest (8871): Cut to underperform from neutral at SMBC Nikko.
  • Hitachi Construction (6305): Raised to buy from neutral at Nomura.
  • Mitsui Fudosan (8801): Raised to outperform from neutral at SMBC Nikko.
  • Nippon Electric Glass (5214): Raised to outperform from neutral at Daiwa.
  • Nomura Real Estate (3231): Rated new neutral at SMBC Nikko.
  • Nomura Research Institute (4307): Downgraded to neutral from overweight at JPMorgan.
  • NTT Data (9613): Raised to overweight from neutral at JPMorgan.
  • Sumitomo Mitsui Trust (8309): Raised to buy from hold at Morningstar.
  • Toei (9605): Raised to overweight from neutral at Mitsubishi UFJ Morgan Stanley.
  • Tokai Carbon (5301): Cut to neutral from buy at Okasan.
  • Tokyo Steel (5423): Cut to neutral from overweight at JPMorgan.
  • Tokyo Tatemono (8804): Rated new neutral at SMBC Nikko.
  • Tokyu Fudosan (3289): Rated new outperform at SMBC Nikko.

Japan stocks

  • Chemicals: Japan to slap new tariff on China-made polyethylene terephthalate.
  • Denka (4061): FDA approves co.’s diagnostic reagent for small, dense low-density lipoproteins-cholesterol.
  • Kansai Paint (4613): Kansai Plascon unit to acquire 90% stake in Sadolin Group of Kenya for $100mln.
  • Mandom (4917): To conduct 2-for-1 stock split on October 1.
  • Mitsubishi Heavy (7011): MRJ made unscheduled landing due to engine problem.
  • Mizuho Financial (8411): Jean-Yves Korenian, head of corporate acquisition finance for Asia-Pacific ex-apan, has left, according to people familiar.
  • NTT Docomo (9437): Ventures arm invests in U.S. startup Petametrics.
  • Screen Holdings (7735): Forms tie-up with Haoneng Technology to build high-end lithium ion battery manufacturing equipment.
  • Sharp Corp (6753): Credit rating lifted to BB- from B+ at R&I, outlook stable.
  • Shimamura (8227): August same-store sales rise 2.4% y/y.
  • Shizuoka Bank (8355): To buy back as much as 1.65% of shares for ¥10bn.
  • Yashima Denki (3153): Cuts full-year net income forecast 21% to ¥1.45bn.

Australasian analyst views

  • BHP: BHP’s New Chairman Heralds Era of Tougher Focus on Spending.
  • EBO NZ: Ebos Says FY Revenue, Profit Increased, Sees Further Growth.
  • NAB: NAB Is Said to Weigh Wealth Unit Options, Including Sale: AFR.
  • MEL NZ: Meridian Energy Full Year Net Income $NZ197mln.
  • NZR NZ: NZ Refining First Half Net Income $NZ35.2mln.
  • KGN: Kogan Founder Is Said to Sell Down Stake at $A3/Share: AFR.
  • VCT NZ: Vector Says Operating Earnings Will Be Little Changed in FY2018.

Australia stocks

  • CCL: CC-Amatil Raised to Neutral at UBS, PT $A8.60.
  • CWY: Cleanaway Cut to Neutral at JPMorgan, PT $A1.36.
  • MMS: McMillan Shakespeare Raised to Equal-weight at Morgan Stanley;Cut to Neutral at Credit Suisse, PT $A15.75.
  • QUB: Qube Cut to Neutral at UBS, PT $A2.80.
  • RFF: Rural Funds Cut to Hold at Wilsons, PT $A1.91.
  • SUN: Suncorp Raised to Overweight at JPMorgan, PT $A13.75.
  • VOC: Vocus Cut to Hold at Morningstar.
  • WTC: WiseTech Cut to Underperform at Credit Suisse, PT $A6.
  • WOR: WorleyParsons New Buy at BofAML, PT $A15.

 nnn

 Arabica coffee had its eight straight decline; the agricultural commodity is going through its longest slump since October 2013. Photo: Shutterstock

 
– Edited by Robert Ryan


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

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

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