Article / 27 April 2017 at 1:44 GMT

Morning Report APAC: Wall St weakness weighs on Asian sentiment

APAC Sales Trading Desk / Saxo Capital Markets
Singapore

 

  • Gold was under pressure in early trading, but it recovered and closed higher
  • The Canadian dollar is under pressure due to rhetoric on NAFTA
  • The NZ dollar was the worst performer of the G10 space
  • EIA reports supported prices, but high output and doubts about Opec hurt them
  • Grains have lost ground on the back of the US threat of a NAFTA exit

By Saxo APAC Sales Trading
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Speeches

  • 1710: Australia – Reserve Bank of Australia governor Philip Lowe speech
  • 2030: EU – European Central Bank president Mario Draghi holds press conference

Overnight news, US

  • Trump’s long awaited tax reform bill underwhelmed markets, resulting in what had been a positive risk day trading softer and turning negative into the close.
  • The focus of the tax reform was largely as anticipated from press commentary in the build-up looking at a 15% corporate tax rate; fewer individual tax brackets with lower taxes, introduction of an offshore repatriation tax as a one-off and some removal of tax deduction allowances.
  • The focus remains on the increased rhetoric around NAFTA and the risks this may pose to both Canada and Mexico.
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  • USD: was generally stronger yesterday most notably against the NZD and AUD.
  • AUD sold off on the CPI numbers which were marginally weaker than expected.
  • NZD: the worst performer of the G10 space, which sagged in sympathy with the CAD, as Trump took aim at dairy subsidies.
  • CAD:  remains under pressure and trading at year lows as the negative rhetoric on NAFTA has seen a ratcheting up.
  • Emerging Markets: MXN, ZAR and RUB took a beating yesterday all weaker by over 1.5% driven by their own idiosyncratic factors. INR and MYR continue to attract attention on solid/improving fundamentals, political stability and carry.

Foreign exchange volatilities

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  • Market still short USDJPY intraweek gamma, and forced to buy Thursday and Friday strikes to offset.
  • USDCAD has seen some interest in back end vols moving higher driven by both technical triggers and fears over NAFTA talks.
  • USDCNH vols have died a slow death over the last two weeks, with little to excite traders out of China.

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  • US 10 year yield fell to session low as market digested Trump’s tax plan as lacking details and doubts about its prospects in Congress, and further weighted by report on a possible withdrawal from NAFTA.
  • Core European bonds closed higher with profit-taking emerged after heavy selloff over past few days.

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  • The Dow Jones Industrial index manage to trade above the 21,000 level intraday but traded soft towards the end of the session as all US indices were almost flat yesterday. European markets did better with the France CAC40 leading the region, up 0.19%.
  • Twitter jumped 7.9% on user growth as its earning came out better than expected. However, recurring concern on monetizing its huge base still remains a huge issue as the company says it expects things to improve in the long term, it still anticipates revenue growth to “meaningfully lag” behind user growth for the rest of 2017. Twitter closed at $15.82.
  • US Steel shares fell almost 27% as it closed $8.33 lower to $22.78 after earnings as it reported a loss of  3 cents a share on revenue of $2.73 billion, while market expected earnings of 32 cents a share on revenue of $2.95bn. Profit guidance was much weaker than expected.

Asia-Pacific stocks

Hong Kong analyst views

  • 3SBio (1530 HK): Rated new hold at Jefferies.
  • Anta Sports (2020 HK): Rated new buy at Maybank.
  • Citic Bank (998 HK): Cut to neutral at Haitong Intl.
  • China Unicom (762 HK): Rated new outperform at CCB Intl; raised to buy at Jefferies.
  • Sanan Optoelectronics (600703 CH): Raised to outperform at Macquarie.
  • Shanghai Intl Airport (600009 CH): Cut to neutral at UBS.
  • Tongda Group (698 HK): Rated new buy at UOB Kay Hian.
  • Wynn Macau (1128 HK): Raised to hold at UOB Kay Hian.
  • Xiamen Xiangyu (600057 CH): Raised to buy at SWS.
  • Yunnan Baiyao (000538 CH): Cut to equal-weight at Morgan Stanley.

Hong Kong stocks

  • Energy: China won’t adjust fuel prices for current cycle; * China to open oil exploitation to qualified cos.: Sec. Journal.
  • Beijing Airport (694 HK): 3-mo. profit 653mln yuan vs 462.4mln yuan year ago.
  • Beijing SDL (002658 CH): 1Q net 12.5mln yuan vs 11.4mln yuan year ago.
  • BBMG (2009 HK): 1Q adjusted profit 440.6mln yuan.
  • CCB (601939 CH): says no plan to reduce entrusted investment.
  • China Eastern (600115 CH): unit Said in talks to sell stake to four Cos.
  • China National Nuclear (601985 CH): FY net income 4.49bn yuan.
  • China Southern Air (1055 HK): $6bn order for 20 Airbus A350 jets.
  • Chongqing Changan (000625 CH): Q1 net 2.4bn yuan vs 2.67bn yuan year ago.
  • Chongqing Store (600729 CH): Q1 net 364.4mln yuan vs 319.6mln yuan year ago.
  • Coolpad (2369 HK): delayed 2016 annual report to come by end of May.
  • Datang Power (601991 CH): Q1 net income 631mln yuan.
  • Daqin Railway (601006 CH): FY net 7.17bn yuan vs 12.6bn yuan year Ago; Q1 net 3.16bn yuan vs 2.05bn yuan year ago.
  • Evergrande (3333 HK): bought back $HK410mln in shares.
  • Gree Electric (000651 CH): FY net income beats highest est.
  • GoerTek (002241 CH): Q1 net 299.1mln yuan vs 197.3m yuan year ago.
  • Guangdong Chj (002345 CH): FY net 233.6mln yuan vs 255.3mln yuan year ago; Q1 net 93.1mln yuan vs 80.5mln yuan year ago.
  • Guangdong Haid (002311 CH): Q1 net 57.8m yuan vs 39.2mln yuan year ago; FY net 855.8mln yuan vs 780mln yuan year ago.
  • Guangshen Railway (601333 CH): Q1 net 282.5mln yuan vs 326.6mln yuan year ago.
  • Guangzhou Baiyunshan (600332 CH): Q1 net 484.7mln yuan vs 409.3mln yuan year ago.
  • Guizhou Yibai (600594 CH): FY net 384.9mln yuan vs 189.4mln yuan year ago; Q1 net 100.8mln yuan vs 82.4mln yuan year ago.
  • HKEX (388 HK): Still hopes Aramco to list in HK: HKEJ.
  • HSBC (5 HK): Chairman Flint hopes for more U.K., EU negotiation room after vote.
  • Hualan Biological (002007 CH): Q1 net 255.3mln yuan vs 192.4mln yuan year ago.
  • Huatai Securities (601688 CH): Q1 net 1.33bn yuan vs 1.25bn yuan year ago.
  • Huaxin Cement (600801 CH): Q1 net 94.9mln yuan vs loss 136.4mln yuan year ago.
  • Huishan Dairy (6863 HK): Michael Chou resigns as company secretary.
  • Jiangling Motors (000550 CH): Q1 net 228.6mln yuan vs 413.6mln yuan year ago.
  • Kingenta (002470 CH): Q1 net 415.2mln yuan vs 404.6mln yuan year ago.
  • Leshi Internet (300104 CH): Q1 rev. 4.92bn yuan.
  • Livzon Pharma (000513 HK): Got 1.13bn yuan as of April 25 on Weixing Transfer.
  • Minsheng Bank (600016 CH): Q1 net income 14.2bn yuan.
  • Pacific Textiles (1382 HK): Tsang Kang Po ceases to be vice-chairman.
  • Pudong Bank (600000 CH): Q1 net interest income 26.5bn yuan.
  • S F Holding (002352 CH): Q1 net income 773.7mln yuan.
  • Shandong Gold (600547 CH): Q1 net 327.4mln yuan vs 204.4mln yuan year ago.
  • Shanghai Jahwa (600315 CH): Q1 net income 108.3mln yuan.
  • Shanghai Lujiazui (600663 CH): Q1 net 449.9mln yuan vs 352.5mln yuan year ago.
  • Standard Chartered (2888 HK): Climbs as overhaul shows signs of sticking; posts surprisingly strong Q1 recovery: Street wrap.
  • SMI Holdings (198 HK): Proposes 5-to-1 share consolidation.
  • TCL (1070 HK): 3-month revenue $HK8.48bn.
  • Tianjin Capital (1065 HK): Q1 profit 119.2mln yuan.
  • Tonghua Dongbao (600867 CH): Q1 net 210.3mln yuan vs 161.6mln yuan year ago.
  • Xinte Energy (1799 HK): 3-month profit 395.3mln yuan.
  • Yanjing Brewery (000729 CH): Q1 net 53.7mln yuan vs 47.2mln yuan year ago.
  • Zoomlion (1157 HK): Q1 net income 84.6mln yuan.

Japan analyst views

  • Hoshizaki (6465): Rated new buy at Mizuho.
  • IHI (7013): Raised to outperform at Daiwa.
  • LINE (3938): Cut to sell at CLSA.
  • Nissin Foods Holdings (2897): Cut to neutral at JPMorgan.
  • Obic (4684): Raised to buy at Daiwa, PT ¥6,600.
  • Showa Denko (4004): Raised to outperform at Iwai Cosmo, PT ¥2,300.
  • Toyo Suisan Kaisha (2875): Downgraded to underweight from neutral at JPMorgan.
  • Yaskawa Electric (6506): Raised to outperform at Iwai Cosmo.

Japan stocks

  • Acom (8572): Posts ¥70.1bn preliminary oper. loss for the year ended March, undercutting its forecast for ¥64.8bn profit.
  • Amano (6436): Full-year net income +9.7% y/y to 9.2b yen vs its forecast of ¥8.8bn.
  • Canon (7751): Raises full-year net income forecast to 180b yen from ¥170bn, in line with analyst estimates.
  • Furukawa Electric (5801): Preliminary full-year operating profit at ¥38bn, beating its forecast by 19%.
  • Hitachi Construction Machinery (6305): Forecasts net income of ¥18bn for current FY, more than doubling y/y.
  • Hitachi High-Technologies (8036): To buy Oxford Instruments unit for £80mln.
  • Hitachi Kokusai (6756):KKR offers ¥2,503 per share.
  • Kao (4452): 3-month operating profit at ¥38.6bn.
  • Koito Manufacturing (7276): Full-year net income +22% y/y to ¥56.7bn vs its forecast for ¥55bn.
  • Line (3938): 3-month operating profit at 4b yen, missing analysts’ estimate for ¥7.4bn.
  • Micron Machinery (6159): To buy back up to 4.84% of shares for ¥400mln.
  • Mitsubishi Heavy Industries (7011): Preliminary full-year operating profit at ¥150bn, missing its forecast of ¥240bn.
  • Mitsubishi Aircraft says current focus not on new sales.
  • Mitsubishi Motors (7211), Nissan Motor (7201): Cos. still small in Southeast Asia and target at least doubling group market share of 7% to 8%.
  • Morinaga Milk Industry (2264): To conduct 1-for-5 reverse stock split.
  • Nissin Kogyo (7230): Full-year net income -84% y/y to ¥5.4bn; beats its forecast of ¥3.5bn.
  • Osaka Gas (9532): Full-year operating profit outlook at ¥66.5bn, below analysts’ estimate for ¥78.4bn; to conduct 1-for-5 reverse stock split October 1
  • Rakuten (4755): Joins IBM Japan to build AI platform.
  • Softbank Technology (4726): To conduct 2-for-1 stock split on June 1.
  • Stanley Electric (6923): Full-year net income +12.3% y/y to ¥28.7bn vs its forecast of ¥27.5bn.
  • Sumitomo Chemical (4005): Preliminary full-year net income at ¥86bn, beating its forecast by 43%.
  • Toshiba (6502): Canon not looking into investing in co.’s chips, Nikkei reports.
  • Toshiba Should Lose EU Cartel Fines Appeal, Top Court Aide Says.
  • Yahoo Japan (4689): Expects only ¥175bn-¥185bn in operating profit this fiscal year, below analysts’ estimate of ¥228.2b yen.

Australia analyst views

  • A2 Milk (A2M): Cut to hold at Bell Potter, PT $A3.26.
  • Automotive Holdings (AHG): Raised to buy at Morningstar.
  • Beadell (BDR): Raised to outperform at Macquarie, PT $A0.30.
  • Breville (BRG): Cut to sell at Morningstar.
  • CC-Amatil (CCL): Raised to outperform at Credit Suisse.
  • OZ Minerals (OZL): Raised to hold at Morningstar.
  • Reliance Worldwide (RWC): Rated new buy at Bell Potter, PT $A3.45.
  • potless (SPO): Cut to hold at Morningstar.

Australia stocks

  • Beach Energy (BPT): Q3 production report expected; NOTE: Co. in Feb. forecast FY17 output 10.3-10.7 mmboe.
  • BHP Billiton (BHP): Tom Ward says Mach may be interested in Fayetteville assets.
  • Generation Healthcare REIT (GHC): NorthWest seeks around $A149m loan for Generation takeover
  • Mirvac (MGR): Q3 sales expected; NOTE: Co. in Feb. forecast FY17 operating EPS $A0.142-$A0.144.
  • MYOB (MYO): Annual meeting scheduled; NOTE: Co. in Feb. forecast double digit rev. growth in FY17, Ebitda margin 45%-50%.
  • Newcrest (NCM): Q3 production reported expected; NOTE: Co. in Jan. forecast FY17 gold output 2.35m-2.6m ozs gold, 80k-90k tons copper.
  • Northern Star (NST): March qtr sales expected; NOTE: Co. in February forecast FY17 output target 485,000-515,000 oz gold.
  • Premier Investments (PMV): Trades ex-dividend.
  • Sandfire Resources (SFR): Q3 production report expected; NOTE: Co. in Jan. forecast FY17 contained copper 65k-68k tons, contained gold 35,000-40,000 oz
  • South32 (S32): Q3 production report expected; NOTE: Q3 met coal output est. 1.78mln tonnes (3 analysts)
  • Ten Network (TEN): H1 results expected; NOTE: Co. in February forecast H1 TV Ebitda loss amid weak ad market.
  • Wesfarmers (WES): Scheduled to release Q3 sales.

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EIA reports of lower inventories helped support prices, but higher production levels and doubts about extending Opec-led output cuts weakened them.  Photo: Shutterstock

 

– Edited by Robert Ryan


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