Article / 08 December 2017 at 1:57 GMT

Morning Report APAC: Wall St lifts Asian stocks, US dollar rallies

APAC Sales Trading Desk / Saxo Capital Markets
Singapore

 

  • Precious metals are under pressure; gold was sold off overnight
  • Today's nonfarm payrolls figure will have a wide-ranging impact on markets
  • The US dollar rallied against most other major currencies
  • Oil rebounded from its earlier selloff on EIA inventory data report
  • Grains fell led by wheat, which faces pressure from abundant US, Russian supply

By Saxo APAC Sales Trading


Economic data of the day (Singapore Time)
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Speeches

  • No significant speeches scheduled for today.

Overnight news, US

  • US stocks rose ending a tough period, USD rallied and US Treasuries fell the day before the release of nonfarm payrolls data today.
  • Trump announced he would release his infrastructure plans in early January. This caused US Treasuries to sell off and the curve to steepen.
  • US House and Senate announced a stopgap spending solution to keep the government shutdown at bay until December 22.
  • Bitcoin traded up a massive 25% in a single day on Thursday. The Futures Industry Association issues an open letter voicing concerns about the upcoming futures launch on US exchanges. 
Overnight news, Europe
  • Late night headlines rumours that a deal has been reached between UK Prime Minister Theresa May and Northern Ireland's Democratic Unionist Party such that she would travel to Brussels early today to deliver a concession on the Irish border.
  • These were later denied by the DUP saying any travel to Brussels would be without the DUP. Nevertheless there is still hope of a deal, keeping GBP bid.
  • German industrial production missed estimates by a big margin, at 2.7% y/y versus 4.3% estimated. 

 

Foreign exchange

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  • US dollar: USD rallied against most of its trading partners buoyed by weaker USTs, Trump infrastructure news and a near term solution on the government shut down.
  • GBP: Sterling continues to be well supported by expectations of a positive outcome on Brexit negotiations, which would open the way for trade negotiations to begin. Risks remain however, as the DUP may block a concession on the Irish border. The absence of  a deal poses material GBP downside risks at this juncture.
  • NZ dollar: was the worst performer on the Fonterra news from yesterday.
  • Emerging Markets: Some big losses for a few EM currencies. BRL fell nearly 2% on fears that the much discussed pension bill may not get through as planned this year. ZAR fell over 1.5% on USD strength and gold weakness.

Foreign exchange movements

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  • GPB vols continue to be very bid with the EU summit deadline looming large. Monday break evens at 0.8%.
  • Fed 14 December 14 has seen some buying interest in USDJPY.
  • There is a bias for topside strikes on the infrastructure bill news on a one month outlook.

Rates

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  • US long end yields were higher after Trump said that he plans to release the infrastructure plan in January. The curve has some sign of steepening.
  • Bunds barely moved overnight, peripherals outperformed led by Italy and Portugal amid risk on sentiment. Spain lagged due to new supply announced.
  • UK gilts yield surged higher amid progress in the Brexit deal.

Commodities 

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US equities 

  • Broadcom reported a better than expected earnings yesterday and saw an intraday move of 5% before finishing flat. The intraday move could suggest that headwinds for supplier of the iPhone components still remains after Apple announced that they will release their own power management chips last week.
  • Lululemon surged 6.4% on accelerating third quarter sales and a positive outlook in the holiday season. Revenue grew 14% to $619 mln and adjusted earnings per share increased 19% to $0.56.
  • A positive drug trial for depression from Sage Therapeutics saw the biotech stocks skyrocketed 70% in a single day. Just a month ago, Sage reported two phase III trials of its drug brexanolone in women with severe postpartum depression, which had already seen the share price jump 50%.

European equities

  • The retailer Steinhoff reported yesterday on account irregularity the extended its dramatic losses from the previous session as it dropped 46%. The South African retailer risk rating has also been changed to rating 5 in Saxo - full margin requirement to trade the CFD.

Hong Kong equities

  • In Hong Kong, the HSI benchmark index recovered marginally led by Tencent which regained 3.3% yesterday. Tencent, currently trades slightly above its 50DMA which it has always been finding good support on. With tech names in US recovering in yesterday, we might have seen a temporary low in Tencent in the short term.
  • Geely auto closed 2.6% lower despite reported all time high sales volume of 141,200 in November.
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 Sterling is supported by hopes of positive Brexit talks, but the threat of the DUP blocking concessions on the Irish border poses a threat to the talks, and GBP. Photo: Shutterstock

 
– Edited by Robert Ryan


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