Article / 15 July 2016 at 1:41 GMT

Morning Report APAC: Wall Street rally to lift Asian markets

APAC Sales Trading Desk / Saxo Capital 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

Overnight news

United Kingdom

  • 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.

United States

  • 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. 

Foreign exchange


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

AUDNZD gamma is still extremely bid with a lot of buyers of ATM and topside and with the announcement of the Economic Update next week by RBNZ, vols gapped higher for NZDUSD with many buyers of one week and one month vols. We suspect that most market makers got taken a lot of Gamma by macro funds and struggle to cover

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

Analyst views

  • 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.

Company news

  • 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

Analyst views

  • 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

Company news

  • 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
Analyst views

  • CYBG (CYB AU) cut to neutral vs buy at Citi

Company news

  • Whitehaven Coal (WHC AU) Q4 production report


Grinding higher ... coffee has surged to a 16-month high following a tumble in Colombian bean exports. Photo: iStock


– Edited by Robert Ryan

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