DAILY EUROPEAN OPENING NEWS: Asian stocks traded with a mixed tone as focus centred on air strikes on Syria over the weekend and Chinese data


ASIA

Asian stocks traded with a mixed tone as focus centred on air strikes on Syria over the weekend and Chinese data. The anticipated US-led response on Syria finally took place on Saturday, which was seen as somewhat of a slap on the wrist as they decided to hit only 3 targets and with the wave of strike action already declared to be over. As such, US equity futures gapped higher at the open, while ASX 200 (+0.2%) and Nikkei 225 (+0.3%) were also in the green as fears of an escalation subsided. Conversely, Shanghai Comp. (-1.5%) and Hang Seng (-1.6%) were negative following the miss on Chinese lending data last week and with tomorrow’s Chinese GDP adding to the risk factors, while the PBoC also announced to raise the 14-day reverse repo rate by 5bps which was in-line with the hikes seen in money market rates in reaction to the March Fed hike. This saw an increase in money market rates in Hong Kong, while underperformance was led by Rusal shares which tumbled over 20% after US announced to impose further Russian sanctions. Finally, 10yr JGBs are uneventful amid a subdued tone in USTs and indecisive risk sentiment in the region, while the absence of a BoJ Rinban announcement also ensured quiet trade. Finally, 10yr JGBs were uneventful and traded little changed amid the mixed risk tone and as a lack of BoJ Rinban announcement also ensured quiet trade.

PBoC injected CNY 80bln via 7-day reverse repos and CNY 70bln via 14-day reverse repos. PBoC hiked the14-day reverse repo rate by 5bps to 2.70% which was inline with the action taken on 7-day reverse repos after the Fed rate hike in March. (Newswires)
PBoC set CNY mid-point at 6.2884 (Prev. 6.2898)

UK

UK Rightmove House Prices (Apr) M/M 0.40% (Prev. 1.50%). (Newswires)

UK Rightmove House Prices (Apr) Y/Y 1.60% (Prev. 2.10%)

UK Q1 Visa spending fell by the most since Q4 2012 as it dropped 1.4% vs. Prev. decline of 1.3%, while March Visa spending fell by most since October last year at -2.1% vs. Prev. -1.0%

UK PM May is to make a Brexit appeal in which she will urge the Commonwealth to bolster trade and forge new relationships. (Times)

The Institute for Government think tanks suggests that UK lawmakers could force PM May back into negotiations, a general election or a second referendum when it casts its decision on the ‘take-it-or-leave-it’ vote. (Newswires)


EU

German Interior Minister rejected demand by Verdi public sector union for a 6% wage hike. (Newswires)

Moody’s raised Spain’s sovereign rating by one notch to Baa1; outlook stable. Fitch affirmed Luxembourg at ‘AAA’; outlook stable. S&P affirmed Poland at BBB+; outlook revised to positive from stable. (Newswires)
 

FX

Major pairs were relatively quiet and began the week range-bound amid a lack of key data releases. Nonetheless, the greenback was slightly softer which marginally benefitted both EUR/USD and GBP/USD, while USD/JPY pulled-back as the overall risk tone gradually deteriorated. Elsewhere, HKD continued to test the 7.8500 bottom-end of the trading band and with it the resoluteness of the HKMA to intervene, while RUB underperformed and weakened over 1.5% against the greenback after the US stated that more Russian sanctions were to be announced today.

COMMODITIES

Commodities were mixed overnight in which WTI crude futures pulled back below USD 67/bbl as geopolitical concerns abated following a somewhat restrained US-led strike on Syria, while the latest Baker Hughes data on Friday had also showed an increase in the number of oil rigs. Elsewhere, gold was indecisive alongside the overall risk tone and as a lacklustre greenback kept prices contained, while copper was also uneventful with mild losses amid the underperformance in its largest consumer China.

US Baker Hughes Total Rig Count (13 Apr) 1008 (Prev. 1003). (Newswires)
 

GEOPOLITICAL

US, UK and France conducted airstrikes in which over 100 missiles were launched at 3 Syrian targets in response to the chemical weapons use. US President Trump stated US is prepared to sustain response until Syria stops use of chemical weapons but added that US does not seek an indefinite presence in Syria, while Chairman of Joint Chiefs of Staff Gen. Dunford said that this wave of airstrikes was finished. (Newswires)

White House said that US President Trump wants US forces to return home from Syria as soon as possible. (Newswires)

US Ambassador to the UN Haley said that there will be further sanctions on Russia which will be announced this Monday. (Newswires)

UK PM May reportedly agreed to give parliament a full debate on the Syria airstrikes and has called for emergency debate this Monday afternoon regarding Syria. (Guardian/Sky)

Russian President Putin said that further strikes by the West on Syria would bring chaos to global affairs. (Newswires)
 

US

Treasury yields were little changed on Friday with most action in the short end of the curve where 2yr yields rose to fresh (almost) decade highs. The rise in 2yr yields resulted in further flattening of the 2s10s and 2s30s curves (by around 3pbs). Treasuries were generally fulfilling their haven role, inversely moving to the direction of equities – particularly so after weak US data. Elsewhere, ahead of next week’s auction of 5yr TIPS, the US Treasury has asked primary dealers opinion on increasing 5yr TIPS issuance in the second half of the year. US 10yr T-Notes futures settle half-a-tick higher at 120-15+.

US Commerce Secretary Ross said he is optimistic on reaching a deal in principle on NAFTA, possibly in the third week of May. However, he also added that if no accord is reached by the Mexican election, a deal is unlikely to be reached until the end of the year. (Newswires)

White House Economic Adviser Kudlow said he is optimistic US and China can avoid a broader trade spat, while he also confirmed US President Trump wants to look into entering the TPP-11 but that it was too soon to determine how long the process would take. (Newswires) This also comes in the context of a WSJ piece stating that the earliest the U.S. could formally start negotiations to join the TPP is sometime next year, and each of the 11 nations still in the deal have a veto. (WSJ)

US Special Counsel Mueller is said to have evidence Trump's lawyer Cohen was in Prague during 2016 Presidential election, which reports state could lend credence to allegations by a former British spy that Cohen met a powerful Kremlin official. Elsewhere, it was also reported that US President Trump is said to have deep concerns on the direction Special Counsel Mueller is taking. (Newswires)

Former FBI Director Comey described the Oval office meeting in which he said President Trump asked him to back off of Michael Flynn which he thinks is certainly some evidence of obstruction of justice. However, he added that he doesn’t think President Trump should be impeached, but instead thinks Trump should be voted out. (Newswires)

16 Apr 2018 - 06:24- Research Sheet- Source: RANsquawk

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