Morning Report APAC: Wall Street rally to lift Asian markets
- Gold dropped to a two-week low; it may have its first weekly loss since May
- The yellow metal is still up 26% this year
- Iron ore in China is trading at close to an 11-week high
- Oil fell amid forecasts crude may side towards $40/barrel on oversupply concerns
- Coffee has reached a 16-month high as Colombian exports plunge
By Saxo APAC Sales Trading
Economic data of the day (Singapore Time: GMT plus 8 hours)
1000: CNY – Industrial Production YoY (Exp. 5.9%, Prev. 6.0%), ytd YoY (Exp. 5.9%, Prev. 5.9%)
1000: CNY – Retail Sales YoY (Exp. 9.9%, Prev. 10.0%), ytd YoY (Exp. 10.2%, Prev. 10.2%)
1000: CNY – GDP YTD YoY Q2 (Exp. 6.6%, Prev. 6.7%), SA QoQ Q2 (Exp. 1.6%, Prev. 1.1%), YoY Q2 (Exp. 6.6%, 6.7%)
1300: SGD – Retail Sales SA MoM (Exp. 1.3%, Prev. 1.1%), YoY (Exp. 1.9%, Prev. 3.8%), Ex Autos YoY (Exp. -3.4%, Prev. -3.0%)
1700: EUR – Eurozone CPI MoM (Exp. 0.2%, Prev. 0.4%), YoY (Exp. 0.1%, Prev. 0.1%), Core CPI YoY (Exp. 0.9%, Prev. 0.9%)
2030: USD – Retail Sales Advance MoM (Exp. 0.1%, Prev. 0.5%), Ex Autos MoM (Exp. 0.4%, Prev. 0.4%), Ex Autos and Gas MoM (Exp. 0.3%, Prev. 0.3%)
2030: USD – CPI MoM (Exp. 0.3%, Prev. 0.2%), CPI ex Food and Energy (Exp. 0.2%, Prev. 0.2%)
2030: USD – CPI YoY (Exp. 1.1%, Prev. 1.0%), CPI ex Food and Energy YoY (Exp. 2.2%, Prev. 2.2%)
2030: USD – Empire Manufacturing (Exp. 5, Prev. 6.01)
2115: USD – Industrial Production MoM (Exp. 0.3%, Prev. -0.4%)
2115: USD – Capacity Utilization (Exp. 75.1%, Prev. 74.9%)
2200: USD – University of Michigan Sentiment (Exp. 93.5, Prev. 93.5)
IDR – Exports YoY (Exp. -12.65%, Prev. -9.75%), Imports YoY (Exp. -10.91%, Prev. -4.12%)
IDR – Trade Balance (Exp. $212Mio, Prev. $376Mio)
PHP – Overseas Remittances YoY (Exp. 4.8%, Prev. 4.1%)
1730: GBP – BOE Chief Economist Andy Haldane releases speech text
- The Bank of England unexpectedly maintained its policy stance, keeping the official Bank Rate at 0.50% (Voted 8 to 1) and the Asset Purchase Facility programme at £375bn.
- According to the statement, “Most members of the committee expect monetary policy to be loosened in August,” and “The precise size and nature of any stimulatory measures” will be determined in the coming weeks.
- The BoE will publish its latest forecasts for UK growth and inflation in its quarterly inflation report alongside the next policy decision on August 4.
- US producer prices rise strongly in June Producer prices rose faster than expected in June (0.5% MoM vs Exp. 0.3%), with strong increases across most goods and services components and largely driven by higher costs for energy. Excluding food and energy, goods prices were flat on the month
- Initial jobless claims printed at a seasonally adjusted 254,000 (Exp. 265,000). The four-week moving average dipped 5,750 to a seasonally adjusted 259,000. Continuing unemployment claims, reflecting workers drawing jobless benefits for more than one week, jumped 32,000 to 2,149,000 (Exp. 2.13mln).
Federal Reserve speech
- Atlanta Federal Reserve President Dennis Lockhart said the central bank should remain "cautious and patient" with any future interest rate increases. However, he said it was still possible the Fed could raise rates as many as two times this year, depending on how the economy evolves
- A truck struck a late-night crowd in Nice on the Mediterranean coast, killing at least 70 people as the nation celebrated Bastille Day. The Paris prosecutor’s office called it a terrorist attack. Several hundred were injured and police ordered people off the streets. The truck driver was shot and killed by police.
GBPUSD rose on initially short term stops on the unexpected move from BoE to keep the rates unchanged. GBP went up 2.8% before retracing to finish up 1.25%. We should still see some selling interest ahead of the 1.3500 resistance
The Reserve Bank of New Zealand will give an assessment of the economy on July 21, which is just four weeks before the next meeting. It’s an unusual move so the market is speculating that RBNZ is preparing for a rate cut pushing NZD 1.2% lower overnight
USDJPY continues to squeeze higher on the news that the government may issue perpetual bonds that the BoJ would purchase, effectively helicopter money.
It was an overall risk on move last night with Equities higher that benefited Emerging Markets currencies such as KRW, USDTWD on stops, USDPHP and on a lesser extent BRL
USDJPY feels still short Gamma for the pair on the move higher in spot and we have seen funds buying the next Bank of Japan and Federal Open Market Committee meetings at the end of the month.
Treasury prices slumped to near 3-week low, pushing yields to their highest level since June 24, following solid US economic data.
The two-year note yield rose 1.2 basis points to 0.677%. The 10-year bond yield is jumping 6.1bps to 1.536%.
In credit, the rally in equities helped the CDS markets to tighten with the biggest movers in emerging markets and Asia in particular. As an example of the risk rally we have seen lately, the five year China CDS dropped from a high of 132 at the end of June to 109 most probably on stops from Hedge Funds
Both the S&P 500 and the Dow hit new record highs as investors cheered stronger-than-expected earnings from J.P. Morgan. Financials (+0.9%), materials (+0.8%) and technology (+0.8%) led the way higher, while utilities (-0.7%) slid.
Highly anticipated largest tech IPO of 2016, Japanese social networking firm Line Corp surged over 30% in market debut after opening at $42.
Germany’s Bayer AG lifted its takeover bid for Monsanto Co. (+3.1%) to about $65bn at $125.00 per share, a $3.00 bump from the earlier offer which Monsanto rejected as too low.
Stoxx Europe 600 advanced 0.8% after Bank of England surprise rate decision.
In the UK, the FTSE100 ended down 0.2% as a rising pound hurt shares of exporters, while bank shares held to higher ground as Barclays PLC gained 2%, Royal Bank of Scotland PLC climbed 2.5% and Lloyds Banking Group PLC ended up 1.6%.
Hong Kong equities preview
- ANTA Sports (2020 HK): Raised to outperform at Credit Suisse.
- Kingdee (268 HK): Cut to neutral at GuoSen Securities.
- China Eastern (670 HK): Rated new outperform at Credit Suisse.
- China Logistics Property Holdings (1589 HK) trading debut.
- Hailan Holdings (2278 HK) trading debut.
- SingAsia Holdings (8293 HK) trading debut.
- Bocom Intl said to seek bank pitches for $200mln H.K. IPO.
- SSY Group (2005) ‘s new product has obtained approval for drug production and registration from the China Food and Drug Administration.
- Agile Ppty (3383) to change stock short name to 'Agile Group'
- China Merchant (144) issued profit warning, expects significant decline in H1 2016 profit due to expected loss from a subsidiary.
- MCC (1618) 1H16 new contracted sales +37.8% YoY to 244.24bn yuan.
- Yuzhou Ppty (1628) Jan to Jun accumulated contracted sales amounted to 12.9bn yuan, achieving 80% of its 2016 target of 16bn yuan.
- Dongfang Electric (1072) to build 120MW wind farm at approx. $250mln in Ethiopia by 2019 (ENA).
- CPIC (2601) January-Junepremium income +19% YoY to 131.4bn yuan.
- China Life (2628) January-June premium income +24.9% YoY to 292.6 bn yuan.
- Ping An (2318) Jan-Jun premium income +21% YoY 256.7bn yuan.
- China South Air (1055) Jun passenger traffic +8.6% YoY while passenger load factor +1% YoY to 80.77%
- Everbright Bank (6818) Everbright Group bought 425.4m A- and H-shares between Jun 27 and July 13, bringing stake to 28.9% of bank and will continue to buy no less than 10mln shares in the next three months while its total shareholding will not exceed 30%..A shares to resume trading today.
- TCL (334) issued profit alert, expects 6mths to record a profit vs net loss year ago.
- Zoomlion (1157) issued profit warning, expects 1H net loss amounted to 800mln yuan to 870mln yuan.
- CMOC (3993) reports unlawful cut in a shrs holding from former senior manager Mr Wang.
- Livzon Pharma (1513) issued profit alert, expects 1H16 net profit increase by 17% YoY -25% YoY to 399-426mln yuan.
- Hailan Hldgs (2278) debut today, closed at $4.65 at grey market, at 17% prem against listing price $3.96.
- CNLP (1589) debut today, closed at $3.33 in the grey market, at 2.4% premium against listing price of $3.25.
Japan equities preview
- Infra Stocks May Gain from ’Zaito’ Bonds Led Stimulus: Citi
- Chiba Bank (8331 JP): Raised to overweight at Mitsubishi UFJ Morgan Stanley
- Concordia Financial (7186 JP): Rated new neutral at Mitsubishi UFJ Morgan Stanley
- Electric Power Development (9513 JP): Raised to overweight at JPMorgan
- Konica Minolta (4902 JP): Cut to neutral plus at Iwai Cosmo
- Life Corp. (8194 JP): Raised to buy at Okasan
- Line Corp. (3938 JP): Rated new buy at Jefferies
- Lion (4912 JP): Downgraded to neutral at Credit Suisse
- Milbon (4919 JP): Downgraded to neutral plus at Iwai Cosmo
- Nintendo (7974 JP): Raised to outperform at Iwai Cosmo
- United Urban (8960 JP): Cut to neutral at Mizuho
- Line Jumps in U.S. Debut of 2016’s Biggest Technology IPO; Tokyo trading debut today.
- Asahi Glass (5201 JP): Prelim. H1 operating profit ¥39bn vs ¥30bn co. forecast, raises full-year target 12% to ¥84bn.
- Asatsu-DK (9747 JP): To pay up to 6.24b yen to acquire Gonzo in tender.
- Chiyoda Integre (6915 JP): 9-month oper. profit -35% to ¥2.42bn; to buy back up to 3.89% of shares for as much as ¥1.1bn.
- Doutor Nichires (3087 JP): 1Q oper. profit +8.2% to ¥2.91bn.
- Fast Retailing (9983 JP): 3Q oper. profit 46.5b yen vs est. ¥29.8bn; lowers full-yr net income target 25% on strong yen, maintains oper. profit outlook
- Ichigo (2337 JP): Q1 profit more than double y/y
- JIN (3046 JP): Cuts full-year oper. profit forecast 16% to ¥3.6bn.
- Kabuki-Za (9661 JP): Q1 operating profit +19% to ¥111mln.
- Line (3938 JP): Shares debut on TSE1 after IPO priced at ¥3,300; rated new buy at Jefferies, PT ¥4,200.
- Matsuya (8237 JP): Q1 operating profit -72% to ¥230mln.
- NOK (7240 JP): Cuts full-year oper. profit forecast 21% to ¥35bn.
- Vector (6058 JP): Q1 operating profit +22% to ¥416mln.
Australia equities preview
- CYBG (CYB AU) cut to neutral vs buy at Citi
- Whitehaven Coal (WHC AU) Q4 production report
– 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.
Samsung Hub | 3 Church Street | # 30-01 | Singapore 049483
Company No. 200601141M