Video

#SaxoStrats
​The Trump administration has not yet formally deployed the long-awaited latest $200 billion in tariffs against China, but a new Wall Street Journal report indicates that Japan might be next on the agenda.
Article / 13 March 2018 at 23:05 GMT

Today's Trade: ASX opens lower on Wall St falls

Trading Desk / Saxo Capital Markets
Australia
  • The ASX200 opened lower following falls on Wall St
  • Oil slid amid concern that global demand might not absorb swelling US supplies
  • CIA Director Mike Pompeo has been nominated as the new Secretary of State 
  • He is replacing Rex Tillerson who was fired via Twitter by Donald Trump

By Saxo Capital Markets (Australia)

Overnight
 
  • US equities fell for the second straight day as markets took in Tuesday’s economic and political news. The 10-year Treasury yield fell while the dollar held steady.
  • While an inflation report reinforced the sense that economic growth is picking up without runaway price increases, energy shares weighed on the S&P 500 Index as oil declined on concern that global demand might not absorb burgeoning US supplies. 
  • Retail sales and crude inventory figures due out Wednesday may offer more clues on the future of the economy.
  • Major indices opened higher, and the Dow Jones Industrial Average climbed as much as 197 points in morning trading after the latest round of inflation data showed consumer prices increased more modestly in February than in the previous month.
  • But shares turned broadly lower by midday, with eight of the 11 sectors in the S&P 500 ending the session in the red.
  • The Dow fell 171.58 points, or 0.7%, to 25,007.03, while the S&P 500 declined 17.71 points, or 0.6%, to 2765.31. The tech-heavy Nasdaq Composite dropped 77.31 points, or 1%, to 7511.01, breaking a seven-session winning streak.
  • Tech stocks were the weakest performers in the S&P 500, falling 1.2%, after a big rally in 2018. Chip maker Qualcomm fell $3.11, or 5%, to $59.70, after President Donald Trump late Monday blocked Broadcom’s $117 billion hostile takeover bid on national security grounds.
  • Meanwhile, financial stocks in the S&P 500, another top-performing sector this year, fell 1.1% alongside a decline in bond yields. Lower yields normally bode poorly for banks’ net interest margins, a key measure of lending profitability.
  • The yield on the US 10-year Treasury note settled Tuesday at 2.848%, down from 2.870% on Monday. Yields move inversely to prices.
  • Before the opening bell, the Labor Department said the consumer price index, which measures what Americans pay for everything from shampoo to hotel stays, rose 0.2% in February after climbing a seasonally adjusted 0.5% in January.
  • President Trump also said Tuesday he would nominate Central Intelligence Agency Director Mike Pompeo as Secretary of State to replace Rex Tillerson.
  • A lack of inflationary jitters during 2017 allowed US stock indices to leap to multiple records early in 2018, while investors kept long-term bond yields subdued.
  • Since the start of February, however, rising inflation in both the US and Europe has prompted investors to second-guess central-bank guidance, fuelling speculation about tighter monetary policy.
  • The inflation data were released against a fraught trading backdrop, with the Trump administration’s announcement of tariffs on steel and aluminum imports having provoked rebukes from China and the European Union in recent days.
  • Elsewhere, the Stoxx Europe 600 slipped 1%

Source: Bloomberg, TradingFloor.com, WSJ.com, CNBC

nnn
 President Trump’s sacking by Twitter of Secretary of State Rex Tillerson – already
being called 'Rexit' – is grabbing the headlines. Photo: Shutterstock

Local markets and commodities

  • S&P/ASX 200 Index futures fell 0.6% to 5,925. Futures relative to fair value suggest an early decline of 0.6%
  • Bank of New York Australia ADR Index fell 1.2% to 274, BHP Billiton ADRs are down 1.5% to A$28.51 equivalent, a 0.6% discount to last Sydney close, Rio Tinto ADRs are down 0.3% to A$66.24 equivalent, a 10.5% discount to last Sydney close
  • After coming under pressure early in the session, gold prices rebounded sharply on the news that US President Trump had fired his Secretary of State. This saw the USD weaken and safe-haven buying emerge as the market tried to digest the implications of this latest shakeup at the White House. 
  • Investors also found comfort in a relatively steady increase in inflation in the US. The 0.2% increase in consumer price index suggests it won’t be enough to spur more rate hikes by the Federal Reserve than already expected. 
  • Spot gold was up 0.27% at $1,326.18/ounce, while US gold futures for April delivery gained 0.44% to $1,326.60. Gold stocks in Toronto added 1.3% overnight. Gold stocks: GOR, NCM, NST, AQG, EVN, KCN, RMS, RRL, SAR, SLR
  • Oil slid in New York amid concern that global demand might not absorb swelling US supplies. Futures fell 1.1%, and April futures slipped below May contracts. The US government expects major shale regions to boost output by 131,000 barrels/day in April, spurring fears that surging supplies will undermine Opec's efforts to clear a glut. 
  • Analysts forecast a third consecutive increase in US inventories. The American Petroleum Institute will release its inventory report later Tuesday. Oil has struggled to recover losses from last month’s broader market slump after topping $66/barrel in January. 
  • While a brighter economic outlook has underpinned demand expectations, expanding American production remains a challenge to Opec and its allies, which are trying to prop up prices via output curbs. "The market is having a wobble on the back of the potential impact on future supply from Iran and also for the ramifications for the Middle East as a whole," Ole Hansen, senior manager at Saxo Bank, said. 
  • West Texas Intermediate for April delivery lost 65 cents to settle at $60.71/barrel on the New York Mercantile Exchange. The spread between the first two contracts settled at minus 4 cents, the first time it closed at a discount since January 22. 
  • Brent for May settlement sank 31 cents to settle $64.64/barrel on the London-based ICE Futures Europe exchange. The global benchmark widened to a $3.89 premium to May WTI. Oil stocks: WOR, WPL, STO, SEA, BPT, OSH, HZN, AWE, KAR, ORG, SXY
  • Sentiment in the iron ore market remained gloomy, with investors still weighing up the implications of the recent US tariffs on steel and aluminium imports. However, prices did recover somewhat on news that the authorities in Tangshan are extending production cuts beyond winter. 
  • A two-tier system of restrictions will be in place until November. Mills closest to the city will have to halt 15% of capacity, while the remainder will need to stop around 10%. The limits are being driven by a need to improve air quality, according the authorities. These restrictions on steel capacity continue to support steel prices, which helps some raw materials such as iron ore. Spot iron ore was flat closing at $71.23. Iron ore stocks: FMG, BHP, GBG, GRR, MGX, RIO, BCI, SDL
  • Industrials were stronger, with the weaker USD helping investor appetites in the base metals sector. Positive fundamentals also helped support the sector. Lead rose sharply, after data showed a spike in cancelled warrants (orders to withdraw inventory from exchange warehouses). This was the same in nickel, while rising premiums and strong consumer orders added to the positivity, although its price was steady. 
  • In the zinc market, prices were unchanged despite further falls, and inventories at LME warehouses pushed prices higher. Among base metals, front-month copper for March delivery edged up 0.5% to $3.1190/pound. Prices have fallen 4.9% this year on worries that demand from China, the world’s largest consumer, might slow, but some analysts expect steady economic data and supply disruptions to boost the industrial metal as the year goes on. Copper stocks: OZL, SFR; Nickel stocks: IGO, WSA; Aluminium stock: AWC
  • New Zealand February Home Sales Rise 1.2% From Year Ago: REINZ
  • Shell Risks Losing Gas Race as Rival Targets Shared Reservoir
  • Ex-dividend: Austal, CSL, Costa Group, Michael Hill Intl, RCR Tomlinson, Sky Network TV, Tassal Group
  • Boral (BLD AU): Sues Saint-Gobain Over Patent for Stone Veneer Wall Panels
  • Brambles (BXB AU): Hosts Investor Day
  • Charter Hall (CHC AU): Considers Taking Full Control of Sydney Office Building in A$300m Deal: AFR
  • Inghams (ING AU): TPG Seeks ~A$200m Selling Shares: Terms
  • New Hope (NHC AU): Non-Deal Roadshow Scheduled By Morgans for Mar. 21
  • Platinum Asset Mgmt (PTM AU): Scheduled to Host Annual Adviser Lunch in Perth
  • Prairie Mining (PDZ AU): JSW CEO Says Looking at Potential Projects Held By Prairie
  • Rio Tinto (RIO AU): Mongolian Mine Asked for Information by Corruption Unit
  • Westpac (WBC AU): Issues A$1.69b of Capital Notes 5

Broker upgrades and downgrades

  • A2 Milk (A2M AU): Rated New Add at Morgans Financial
  • Integral Diagnostics (IDXAU): Upgraded to Buy at Ord Minnett; PT A$2.39

AUDJPY

The rally seen in AUDJPY, which ensued following the retest of the 2017 base, seems to have come to an end as the overnight session saw a bearish reversal off its historically noisy levels. The overnight high also coincides with a 38.2% retracement between the 2018 high to low thus a short trade makes sense with a stop above the session high at 84.50. The downside target is the 83 handle followed by 82 where we would neutralise all bearish trades.

AUDJPY monthly
1
Source: SaxoTrader. Create your own charts with SaxoTrader; click here to learn more 
 
Today's data sources: AFR, SMH, CNBC, BBG, WSJ, The Australian, Reuters

– Edited by Gayle Bryant

Today's Trade is compiled by the Sydney trading desk at Saxo Capital Markets. Follow the team on Twitter at: twitter.com/SaxoAustralia. Saxo Capital Markets (Australia). 

Saxo Capital Markets (Australia) Pty Ltd | A part of Saxo Bank Group
ABN 32 110 128 286 | AFSL 280372
Level 25, 2 Park Street SYDNEY NSW 2000
Phone: +61 (2) 8267 9000 | Fax: +61 (2) 8267 9050
Please visit our website at: http://www.saxomarkets.com.au
IMPORTANT INFORMATION
The daily outlook is brought to you by Saxo Capital Markets (Australia) Pty Ltd ABN 32 110 128 286, AFSL 280372 (Saxo Capital Markets), in association with TradingFloor.com which is the property of Saxo Bank A/S, the parent company of Saxo Capital Markets. TradingFloor.com is a social trading facility offering clients of Saxo Bank Group access to in-depth market news, commentary, analysis and much more.
The content of the daily outlook should not be considered as a ‘personal’ or specific investment advice catered for your specific need, objectives or financial situation, or be construed as an express or implied promise, guarantee or implication by Saxo Capital Markets that clients will profit from the strategies expressed or that losses in connection therewith can or will be limited.
None of the information contained in the daily outlook constitutes an offer (or solicitation of an offer) to buy or sell any currency, product or financial instrument, to make any investment, or to participate in any particular trading strategy. Saxo Capital Markets; TradingFloor.com shall not be responsible for any loss arising from any investment based on any forecast or other information contained in the daily outlook. Past performance is not a reliable indicator of future performance. Information contained in this daily outlook may have previously been distributed to; and acted upon; by other clients and persons who have shown interest in Saxo Capital Markets, as well as internal affiliates/employees of Saxo Capital Markets. Any trade ideas or positions contained herein relating to products or services offered by Saxo Capital Markets may be inconsistent to trades/positions entered into by Saxo Capital Markets and/or its affiliates. Further, any information contained may consist of opinions and views of the ‘Sales Trading Desk’ as a team, however does not reflect the ‘specific’ opinion of Saxo Capital Markets.
Trades in accordance with the information contained in the daily outlook, especially, but not limited to, leveraged investments such as foreign exchange trading and investment in derivatives, can be very speculative and may result in losses as well as profits, in particular if the conditions mentioned in the daily outlook do not occur as anticipated. Prior to making any investment or entering into any transaction, you should carefully consider your financial situation and consult your independent financial expert in order to understand the risks involved and ensure the suitability for you of any investment or transaction decision you enter. Any information or opinions in this material are not intended for distribution to, or use by, any person in any jurisdiction or country where such distribution or use would be unlawful. Please refer to our Combined Financial Services Guide & Product Disclosure Statement available via www.saxomarkets.com.au. Please also consider whether acquiring or continuing to hold financial products is suitable for you, prior to trading and investing.
If you would like to unsubscribe from the Daily Outlook, please reply ‘Opt Out’ to this email with your Client ID.
Terms & Agreement | Disclaimer | Financial Services Guide | Privacy Policy | Contact Us |
SAXO CAPITAL MARKETS (AUSTRALIA) PTY LTD
LEVEL 25, 2 PARK STREET SYDNEY NSW 2000 AUSTRALIA

Disclaimer

The Saxo Bank Group entities each provide execution-only service and access to Tradingfloor.com permitting a person to view and/or use content available on or via the website is not intended to and does not change or expand on this. Such access and use are at all times subject to (i) The Terms of Use; (ii) Full Disclaimer; (iii) The Risk Warning; (iv) the Rules of Engagement and (v) Notices applying to Tradingfloor.com and/or its content in addition (where relevant) to the terms governing the use of hyperlinks on the website of a member of the Saxo Bank Group by which access to Tradingfloor.com is gained. Such content is therefore provided as no more than information. In particular no advice is intended to be provided or to be relied on as provided nor endorsed by any Saxo Bank Group entity; nor is it to be construed as solicitation or an incentive provided to subscribe for or sell or purchase any financial instrument. All trading or investments you make must be pursuant to your own unprompted and informed self-directed decision. As such no Saxo Bank Group entity will have or be liable for any losses that you may sustain as a result of any investment decision made in reliance on information which is available on Tradingfloor.com or as a result of the use of the Tradingfloor.com. Orders given and trades effected are deemed intended to be given or effected for the account of the customer with the Saxo Bank Group entity operating in the jurisdiction in which the customer resides and/or with whom the customer opened and maintains his/her trading account. When trading through Tradingfloor.com your contracting Saxo Bank Group entity will be the counterparty to any trading entered into by you. Tradingfloor.com does not contain (and should not be construed as containing) financial, investment, tax or trading advice or advice of any sort offered, recommended or endorsed by Saxo Bank Group and should not be construed as a record of ourtrading prices, or as an offer, incentive or solicitation for the subscription, sale or purchase in any financial instrument. To the extent that any content is construed as investment research, you must note and accept that the content was not intended to and has not been prepared in accordance with legal requirements designed to promote the independence of investment research and as such, would be considered as a marketing communication under relevant laws. Please read our disclaimers:
- Notification on Non-Independent Invetment Research
- Full disclaimer

Check your inbox for a mail from us to fully activate your profile. No mail? Have us re-send your verification mail