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RANsquawk EU Open Rundown 08.11.17

  • Asian equities traded mixed with profit taking initially dragging down major bourses, while the rally in commodities ran out of steam
  • USD/JPY marginally lower amid the slight slip in US yields. Antipodean currencies performed a tad better against the greenback
  • Looking ahead, highlights include DoEs, BoE’s McCafferty and Carney

ASIA

Asian equities traded mixed with profit taking initially dragging down major bourses, while the rally in commodities ran out of steam. Additionally, US equity futures were also off marginally following reports that Senate GOP is said to consider delaying corporate tax rate cut for a year. ASX 200 (+0.07%) initially pulled away from its recent 10yr high seen yesterday, while Commonwealth Bank shares outperformed after a firm earnings report. Similarly, the Nikkei 255 (-0.1%) also retreated from its recent highs with financials leading the losses, while Toyota shares surged higher after strong earnings. Both the Shanghai Comp (+0.5%) and Hang Seng (+0.3%) moved into positive territory fuelled by tech stocks as shares in China Literature doubled on their debut trading session, in turn sspanugging off the Chinese trade data which missed analyst estimates. In credit markets, JGBs have been supported by spill over buying in USTs while the Japanese curve has been noticeably steeper with the short-end yet again outperforming as the 2yr yield falls 1.5bps.

Chinese Trade Balance (CNY)(Oct) M/M 254.5B vs. Exp. 280.5B (Prev. 193B)

Exports (CNY)(Oct) Y/Y 6.1% vs. Exp. 7.0% (Prev. 9.0%)

Imports (CNY)(Oct) Y/Y 15.9% vs. Exp. 17.5% (Prev. 19.5%)

Chinese Trade Balance (USD)(Oct) 38.2B vs. Exp. 39.45B (Prev. 28.47B)

Exports (USD)(Oct) Y/Y 6.9% vs. Exp. 7.0% (Prev. 8.1%)

Imports (USD)(Oct) Y/Y 17.2% vs. Exp. 16.8% (Prev. 18.7%)

FX

Very quiet in FX markets, USD/JPY marginally lower amid the slight slip in US yields, however, large options from 113.50 to 114.50 has signalled signs that USD/JPY will be kept within a tight range. Antipodean currencies (AUD,NZD) performed a tad better against the greenback, with USD weakness stemming from concerns over the tax plan.

COMMODITIES

WTI and Brent crude futures eased from 2yr highs, while prices continued to slip after the latest API crude report showed a slightly smaller than expected drawdown in the headline figure. Precious metals relatively directionless with gold prices up marginally as risk sentiment cooled off.

US API weekly crude stocks (30 Oct, w/e) -1.562M (Prev. -5.09M). (Newswires)

China's MOFCOM says they have set non-state 2018 crude oil import quota at 142.42mln tonnes. (Newswires)

US

Yields were little changed across the Treasury curve on Tuesday; short-end yields up by around 1bps, though 5s tspanough 30s yields narrowed, resulting in flattening in some of the curve spreads to fresh decade lows. Elsewhere, a lacklustre 3-year auction out of the US Treasury tailed by 0.2bps, though the yield the paper was sold at was the highest since 2010. Cover was lower than the previous month’s, as well as recent averages, and participation was more-or-less in-line with recent averages.

Senate GOP said to consider 1yr corporate tax cut delay, according to Washington Post. (Newswires)

Fed's Harker (Hawk, Voter) states that the Fed is on pace to hike rates at the December meeting, adding that 2018 hinges on inflation. (Newswires)
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