DAILY US OPENING NEWS:

 

 

ASIA-PACIFIC

Asia equity markets traded mostly negative following the losses on Wall St. where the DJIA snapped a 9-day win streak, and with sentiment dampened after North Korean verbal provocation in which its Foreign Minister suggested its counter-measures could mean testing a hydrogen bomb in the Pacific. This followed defiant comments from North Korean leader Kim who labelled Trump a dotard and pressured Nikkei 225 (-0.3%) as well as most indices in the region, although ASX 200 (+0.3%) was kept afloat by strength in its largest weighted financials sector. Hang Seng (-0.9%) and Shanghai Comp. (-0.5%) conformed to the subdued tone in the region with sentiment reeling from a downgrade to China and Hong Kong’s sovereign ratings by S&P. Finally, 10yr JGBs and T-notes gained on the safe-haven flows, although upside was capped following an enhanced liquidity auction for longer dated Japanese bonds which showed a weaker b/c than prior.

S&P downgraded Hong Kong’s sovereign rating to AA+; outlook stable from AAA; outlook negative. (Newswires)

PBoC injected CNY 100bln via 7-day reverse repos and CNY 20bln via 28-day reverse repos, for a net weekly injection of CNY 450bln vs. last week's CNY 260bln net injection. (Newswires)

PBoC set CNY mid-point at 6.5861 (Prev. 6.5867)

UK/EU

RANsquawk source says UK PM May speech on Brexit will take place around 14:15 BST (15:15 CEST/ 09:15 EDT) on 22 Sep 2017. There has also been chatter of “around” 14:30 BST.

ECB's Draghi says that we are not there yet on inflation. (Newswires)

Geopolitical

North Korea counter-measure may mean testing a hydrogen bomb in the Pacific, according to reports in Yonhap citing North Korea's Foreign Minister. (Yonhap)

The Iranian President has informed armed forces that the nation will bolster its missile capabilities, according to local TV

US President Trump announced new executive order to target individuals & companies that trade with North Korea, while there were also reports that EU agrees on new sanctions against North Korea. (Newswires/AFP)

North Korea leader Kim said North Korea will consider 'corresponding, highest level of hard-line measure in history' against US, while he also stated that President Trump's UN speech was rude nonsense and demonstrated insanity and inhumanity which confirmed North Korea's nuclear and missile advances are on right path and will continue to the end. (KCNA)

EQUITIES

European equities have shrugged off some of the downbeat sentiment seen during Asia-Pac trade which stemmed from fresh North Korean provocations. More specifically, the NK Foreign Minister suggested its counter-measures could mean testing a hydrogen bomb in the Pacific. Nonetheless, European bourses have chosen to look through these threats and have taken a more in-looking view amid this morning’s slew of PMI readings which showed beats for Germany, France and the Eurozone as a whole. In terms of sector specifics, material names underperform while consumer staples have lead markets higher, with the notable stock specific mover being L’Oreal (OR FP) amid speculation over Nestle’s stake in the Co. in the wake of heiress Battencourt’s death.

FIXED INCOME

Bund futures have seen a bit of a retracement towards 161.00 as risk-off sentiment eased and upbeat Eurozone PMI’s, with the region having already digested this week’s sovereign supply. Elsewhere, peripheral yields have seen some modest tightening with little activity seen in core paper.

FX

In FX markets, in-fitting with the sentiment seen across the continent, the EUR has been given a helping hand with the EUR/USD pair eyeing 1.2000 to the upside once again which also comes amid a broader USD retracement. Elsewhere, GBP/USD has seen a pullback from yesterday’s gains as markets now await further clarity on the UK’s Brexit path from PM May today via her speech from Florence later today. NZD will most likely also be one to watch heading into the weekend ahead of the election on Saturday; albeit polls have recently suggested that the incumbent National Party should secure victory.

JPY

North Korean rhetoric spurred some safe-haven flows, as USD/JPY took some extra impetus from some week end unwinds. The touted resistance around the 112.70 area has been evident of profit taking, as many investors seem concerned to hold weekend positions following further threats of hydrogen bomb tests from the rebel state.

COMMODITIES

In commodities, Chinese metal prices were lower with Dalian Iron Ore prices slipping around 4%, plumbing multi week lows, given expectations of slower winter demand and steel output curbs, while S&P downgrading China’s credit rating also added to the recent headwinds. Elsewhere, gold prices rose over 0.5% on flight-to-quality flow after reports that North Korea is willing to conduct a H-Bomb test in the Pacific. Energy markets will be focusing on the fallout from today’s OPEC/non-OPEC meeting, with two delegates suggesting that today’s sit down will be “brief.” Furthermore, the Russian energy minister has briefed media saying that discussions will focus on export monitoring and US shale production.

OPEC and non-OPEC producers are looking at all parameters for export monitoring, according to the Venezuelan oil minister. (Newswires)

Libya's national oil production is at about 900,000 BPD, according to a Libyan oil source. (Newswires)

22 Sep 2017 - 10:32- EnergyData- Source: RANsquawk

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