Article / 19 February 2018 at 1:55 GMT

Morning Report APAC: US metals tariff threat sparks trade war talk

APAC Sales Trading Desk / Saxo Capital Markets
Singapore

 

  • The US wants to slap hefty duties on aluminium and steel imports
  • The downtrend in USD looks set to continue; there is strong buying interest in GBP
  • Wall Street is closed for President's Day today
  • Some Asian markets are closed for the Lunar New Year

By Saxo APAC Sales Trading

Economic data of the day (Singapore Time)
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Speeches

  • 2130 – EU – German Chancellor Angela Merkel, Luxembourg's Prime Minister Xavier Bettel Meet in Berlin Before EU Summit


Overnight news, trade wars

  • The US want to implement tariffs on aluminium and steel imports of at least 24%. The Commerce Department recommended a 7.7% tariff on aluminum imports, or a 23.5%  tariff on aluminium products from China, Hong Kong, Russia, Venezuela and Vietnam.

Overnight trade news, Russian indictment

  • Robert Mueller's indicted 13 Russian nationals and a St. Petersburg "troll farm" for trying to sway the 2016 presidential election drew sharp responses from both nations. The indictment doesn’t talk about collusion between Donald Trump and the Russians

 

 

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  • USD rallied slightly on Friday but nothing much to signal except some profit taking ahead of the long weekend. The trend lower for USD should remain the same.
  • Watch for the Federal Open Market Committee minutes on Wednesday night to see if there will be any indication of acceleration of rate hikes that could trigger an initial USD buying interest. 
  • Emerging Markets: Very quiet day in the EM space with still strong interests to sell any USD rallies.


Foreign exchange movements

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  • The market seems still short a bit of USDJPY below ¥106; but the market is getting very neutral at this level in the vol market.
  • We are seeing strong buying interest for GBP topside in the one month and two month area.


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  • US 10s retreated slightly on good housing data as the 3.0% yield remains the elusive target.


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US equities

  • US stock markets will be closed today in observance of Presidents’ Day.
  • The S&P and the Dow manage to eke out slight positive gains on Friday while Nasdaq closed in the red on Friday with an inverted hammer formation. Rejection on possible profit taking for the price action to advance higher also came in at the 0.764 retracement (year high to recent low) that our technical analyst Kim Larsson pointed out.
  • Steel stocks were in focus after the US Secretary of Commerce Wilbur Ross recommended slapping a global tariff of 24% on all steel  imports, with a tariff of at least 53% on imports from Brazil, China, Costa Rica, Egypt, India, Malaysia, Korea, Russia, South Africa, Thailand, Turkey and Vietnam. Steel stocks spiked with US Steel gaining as much as 14.8% by the close.
  • Riot Blockchain, a block-chained linked stock (duh!) tumbled 33.37% to close at $11.46 on Friday. At its peak, the ex-health care block-chain stock was trading at $45 in December last year is under investigation whether its officers and directors violated federal securities law. On February 16, 2018, CNBC published an investigative report, warning investors of numerous "red flag," including "annual meetings that are postponed at the last minute, insider selling soon after the name change, dilutive issuances on favorable terms to large investors.
  • The technology and social media company Snap, which released its result two weeks ago, continues its upwards momentum on Friday. However, filing after market closes indicates that the Snap CEO and founder, Evan Spiegel sold a small portion of approximately 2.7mln shares in Snap stock on February 14 at an average price of $18.72 or $50mln in total. Price of stock has soared by 9.08% since then.

European equities

  • Europe finished strongly higher with gains across all indices close to 1%. The FTSE was the underperformer on Friday after weaker retail sales was announced.
  • Segro PLC shares jumped 6.48% after the British property investment company raised its dividend by 6.1% after pretax profit for 2017 was announced to be doubled to £976.3 million. Stock has been on a strong uptrend and could test 600GBp in the week ahead
  • Electricite de France, EDF climbed as much as 9% on Friday but to only close at 4.6% after the French utility posted an earnings beating result. The utility provider also announced a 31 cents dividend.

Hong Kong equities

  • The Hong Kong Stock Exchange is closed for the Lunar New Year

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Any trade war between the US and its trading partners over steel and aluminium imports is likely to have a global impact, including on miners and commodities. Photo: Shutterstock

  
– Edited by Robert Ryan


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