Friday, 18 August 2017

Nifty Skids & Dragged By Infy Over Sikka’s Resignation And Murkier “War Of Words”; Subdued Global Cues Tracking Terror In Barcelona & US Political Hangover Also Dragged The Indian Market Today



Market Wrap: 18/08/2017 (17:00)

NSE-NF (Aug):9850 (-60; -0.60%) (TTM PE: 25.10; Nr. 2 SD of 25; Avg PE: 20; TTM EPS: 392; NS: 9837)

NSE-BNF (Aug):24094 (-168; -0.69%) (TTM PE: 30.28; Abv 3 SD of 30; Avg PE: 20 TTM EPS: 795; BNS: 24074)

For 21/08/2017: 

Key support for NF: 9825/9770-9705

Key resistance for NF: 9885/9905-9950

Key support for BNF: 23925/23850-23750

Key resistance for BNF: 24275-24400

Hints for positional trading:

Time & Price action suggests that, NF has to sustain over 9905 area for further rally towards 9950/9980-10005/10035 & 10095-10115 area in the short term (under bullish case scenario).

On the flip side, sustaining below 9885 area, NF may fall towards 9825/9770-9705 & 9660-9595 area in the short term (under bear case scenario).

Similarly, BNF has to sustain over 24275 area for further rally towards 24400-24525 & 24675-24750 area in the near term (under bullish case scenario).

On the flip side, sustaining below 24225 area, BNF may fall towards 23925/23850-23750 & 23600-23500 area in the near term (under bear case scenario).

Nifty Fut (Aug)/India-50 today closed around 9850, slipped by almost 60 points (-0.60%) after making an opening minutes high of 9869 and mid-session low of 9794 amid panic selling in Infy as “war of words” between the board & its founder (NRN) got murkier following surprised (?) resignation of its CEO Sikka citing “recent drumbeats of distractions & sickening personal attacks & allegations” as primary reasons behind his sudden resignation.

As Infy concall reveals uglier side of the board room battle, the scrip further tumbled to around 14% coupled with another NRN letter bomb; thus dragging the index (Nifty) by around 65 points alone at one point of time as it’s an heavy weight scrip in the index. Sikka’s sudden resignation may have caused a symbolic loss of around Rs.25000 cr for Infy investors today.

But, towards the last hour of trading, Infy got some buying/short covering support on buzz that Nandan Nilekani, another insider trusted Infy man may be the next man in charge in place of Sikka and it closed around 10% lower; subsequently Nifty also recovered from day low amid intense short covering & some value buying. Also, assurance by Infy chairman that their buyback offer is still valid and co will be guided by Sikka in this interim period may have also calmed the nerves of the market today.

Incidentally, Infy scrip yesterday made a 52 weeks high of around 1029 on buyback news and today it made a 52 weeks low of 884 on Sikka’s resignation !! But, Sikka’s resignation may not be very surprising, if one follows various events & the co’s own declaration in its last financial report; the writing on the wall may be very clear; but such knee-jerk reaction may be also very normal in such scenario.

Sikka was under significant pressure from NRN & other promoter/founders related groups to declare a good buyback offer to return part of huge unutilized “cash & cash equivalents in hands” to the share holders as the co may be finding it tough to grow organically or inorganically, considering the changing landscape of the Indian IT outsourcing industry. Almost all the other major IT cos has declared such buyback offers in the recent past.

Indian market (Nifty Fut/India-50) today opened around 9870, almost 44 points down tracking subdued global cues tracking Barcelona terror & US political hangover. The market soon came into further stress following surprised resignation of Infy CEO Vishal Sikka amid an environment of trust deficit & repeated interference in the functioning of the Co by its founders.

On the other side of the Infy story, promoter/founders are accusing Sikka for huge travel expenses by private jets, irrational salary increase & severance payment to some former employees including Bansal and an unsatisfactory performance.

Sikka was instrumental in reviving the performance of Infy, since he took over in 2014 and market has a great trust in his ability; thus his sudden resignation amid corporate governance & share buyback issues may have left the investors in jittery and subsequently Infy is down today by almost 10%, dragging the Nifty index by over 55 points alone. His resignation may also trigger more attrition among other key Infy people.

After Tata Sons fiasco with Mistry, this Infy incident may also raise concerns among the investors for the overall corporate governance of Indian promoters or legacy founders and their relationship with the professional CEOS in their cos, who are supposed to work for the betterment of the co independently without much interference from the founders and is answerable only to the board; i.e. it may be a fight between promoters & professionals.

Thus, it may be best for the family oriented large Indian cos to appoint someone eligible within their family as CEO rather than taking service of an outsider, who may not be their “yes man” always; founders’ family have to come forward directly to manage their own co at driver’s seat, rather than trying to operate it through a remote control (puppet).

Traditionally, Indian IT outsourcing industry is a huge USD (FX) earner and also one of the backbones of the Indian economy. But now, with changing technical requirement coupled with anti-globalization narratives in US and also in certain other countries like UK, this may be a huge challenge for the Indian Govt as unemployment is rising rapidly, which may also turning into a major political issue in the forthcoming 2018-19 general election for NAMO.

A raising unemployment in the savvy IT sector may be also bad for the retail banking NPA, which is already on the upper trajectory apart from the huge corporate NPA.

Nifty was today dragged by Infy, HDFC, HDFC Bank, VEDL, Sun Pharma, ZEEL, Tata Motors, Axis Bank, SBI & Yes Bank. Infy alone dragged the Nifty by over 55 points today, while HDFC duo dragged it by around 19 points.

Nifty was supported today by Bharti Infratel, HUL, TCS, Eicher Motors, ITC, RIL and Bharti Airtel; telecoms were upbeat today as Govt may extend some sops to the ailing sector, which may be in line for next stressed sector for the banks after steel & power. ITC closed in positive today on buzz of increase in Cigarette prices despite Govt’s warning about illegal advertisements of Cigarettes, which may be legally not tenable.

Overall, Banks & Pharma scrips were in pressure today, but a last hour short covering rally made the Nifty to close 1% higher for the week against loss of 3.5% in the last week, marked by “Shell cos” fiasco. Apart from Sikka episode, muted Q1 earnings & NPA concern may have also dragged the Indian market today amid subdued global cues.

Globally, almost all the major Asian markets from Sydney to Tokyo are now trading in negative tracking subdued global cues & a weak USD after the tragic terrorist incident at a popular tourist place in Spain/Barcelona coupled with ongoing US political/policy paralysis and resignation squabbling (rumour) of Cohn, a key architect of Trump’s tax reform policy & his chief economic adviser and also the potential replacement of Yellen.

Although, Cohn has not resigned till now, he may be under immense pressure from intellect & corporate US to distance himself from Trump amid his controversial stance on the VA white nationalistic fiasco. Overall, US political & policy paralysis coupled with poor visibility of Trumponomics may be huge negative for the USD & risk assets including equity.

As corporate America is deserting Trump one by one, market may be unnerved as despite so much Trump tantrum, his corporate circle may be one of the elements of confidence booster among the investors, as they still believed Trump’s ability to deliver his Trumponomics narratives. But, now the whole rhetoric of Trumponomics may be in serious doubt not only for the ongoing daily US political entertainment, but may be also for limited fiscal maneuver room in the US budget itself.

Even, Trump’s own RNC GOP members now seems to be distancing themselves from his controversial hardcore nationalistic/racist image and all these may be also an indication that days of Trump as US Prez may be over; he may either resign or impeached shortly.

Although, yesterday’s overall US economic data may be mixed, the ongoing US political drama, WH hangover coupled with Cohn’s resignation buzz and above all, the tragic terror incident at Spain has made the USD & risk assets (US/global equity) lower. As a result, overnight US market (DJ-30/US-30) closed in deep red around 21751 (-1.24%) and SPX-500 (US-500) now also trading almost flat around 2430 (+0.14%) on geo-political risk aversion.

Looking ahead, SPX-500 now need to sustain over 2420-2415 zone; otherwise 2395-2370 zone may be clearly visible as market sentiment may be now clearly being driven by geo-politics, rather than economics. The repeated easy terrorist attacks by a moving vehicle in different parts of EU, targeting innocent man & women and also tourists may be a blow to EU’s huge tourism industry & employment.

Elsewhere, Australian market (ASX-200) also closed in deep red around 5747, down by almost 0.60% on a higher AUDUSD coupled with some negative report about AU bank’s credit rating by Fitch on account of CBA’s money laundering issues involving illegal cash deposits; banks & financials are dragging the AU market to some extent.

Japan (Nikkei-225) closed in red around 19470, down by almost 1.18% tracking a higher Yen (lower USDJPY) amid ongoing US political jitters and flight to safe heaven assets on Barcelona terror incident; JPY is also getting higher against EUR & GBP, putting more pressure on the export heavy JP index today. But upbeat JP corporate earnings may be also supporting the overall market sentiment there, but banks, financials & insurers are dragging the Nikkei today.

China (SSE) was almost flat around 3269 (+0.01%), being supported by upbeat metals & miners on global/EU growth optimism coupled with tighter supply; solid earnings from some of the leading tech cos. A mixed China housing price report may be also affecting the overall market sentiment, as cool down of housing boom may be an indication that China GDP growth is topping out.

Today PBOC fixed USDCNY a little higher at 6.6744 vs 6.6709 yesterday and injected net 20 bln Yuan in its daily OMO operations; for the week, it injected a net 110 bln Yuan against net drain of 30 bln Yuan last week. This may be also helping the overall stability of China market this week ahead of Party congress and ongoing PBOC effort of deleveraging & regulatory tightening.

Hong-Kong (HKG-33) was trading around 27060, down by almost 1% on higher USD & subdued global cues as Trump trade fades; it’s also being dragged by banks & financials today, but being supported by upbeat techs & metals.

Meanwhile, Crude Oil (WTI) is now trading around 47.25, up by almost 0.40% after overnight plunge from 47.17 to almost 46.45 tracking a mixed EIA report, which indicates a higher gasoline inventories & US shale supply despite a surprised Crude drawdown in line with API report; technically, 46.30 zone mat be an immediate support for the WTI now.

Gold is also hovering around 1295, up by almost 0.45% on geo-political risk aversion and a weak USD; sustaining above 1297-1310 area, it may further rally towards 1355-1375 zone in the days ahead.

Elsewhere, EU stocks are also in deep red tracking terror in Spain/Barcelona & intensified political hangover at WH and subsequent risk aversion flows into safe heaven assets; USD is getting weaker across the board and a strong EUR is negative for EU economy & stocks.

Overall, market sentiment may be now clearly being driven by geo-politics, rather than economics. The repeated easy terrorist attacks by a moving vehicle in different parts of EU, targeting innocent man & women and also tourists may be a blow to EU’s huge tourism industry, hotels, airlines & subsequently, EZ employment.

Also, market may be increasingly jittery about Trump’s political immaturity, which may be the prime reason behind today’s WH policy paralysis; yesterday Trump dissolved his infra council even before it began functioning, which may be an indication of gravity of the underlying situation.

The poor visibility of Trumponomics rhetoric may be a major headwind for the reflation or Trump trade coupled with distancing of the corporate America from Trump, who may be enjoying some kind of benefit of doubt by the market so far, being a non-political person having a great business sense & deal maker!!

The Euro Stoxx-50 is now 0.90% down and similarly FTSE-100, CAC-40, IBEX-35 (Spain) are all down by around 1% and DAX-30 is down by around 0.60%. Apart from Airline, hotels & other tourism related stocks, Banks are also in pressure for concern of lower Fed rate, which may be negative for their NIM, operating in US as they can’t increase their lending rate with a dovish Fed.





SGX-NF



BNF


 USDJPY

Nifty May Open In Deep Red Amid Subdued Global Cues Marked By Tragic Terrorist Activities In Spain Coupled With US Policy Paralysis & Resignation Squabbling Of Cohn; Indian Market May Further Digest Muted Q1FY18 Earnings & An Unexpected Resignation Of Infy CEO (Sikka)



Market Mantra: 18/08/2017 (09:00)

SGX-NF: 9860 (-54)

For the Day: 

Key support for NF: 9815/9795-9765/9705

Key resistance for NF: 9885/9905-9950/9980

Key support for BNF: 24250-24150

Key resistance for BNF: 24425-24525

Hints for positional trading:

Time & Price action suggests that, NF has to sustain over 9905 area for further rally towards 9950/9980-10005/10035 & 10095-10115 area in the short term (under bullish case scenario).

On the flip side, sustaining below 9885-9865 area, NF may fall towards 9815/9795 & 9765-9705 area in the short term (under bear case scenario).

Similarly, BNF has to sustain over 24525 area for further rally towards 24600-24725 & 24900-25025 area in the near term (under bullish case scenario).

On the flip side, sustaining below 24475-24425 area, BNF may fall towards 24250-24150 & 23950-23850 area in the near term (under bear case scenario).

As par early SGX indication, Nifty Fut (Aug) may open around 9860, down by almost 54 points tracking subdued global cues after the tragic terrorist incident at a popular tourist place in Spain/Barcelona coupled with ongoing US political/policy paralysis and resignation squabbling (rumour) of Cohn, a key architect of Trump’s tax reform policy & his chief economic adviser and also the potential replacement of Yellen.

Although, Cohn has not resigned till now, he may be under immense pressure from intellect & corporate US to distance himself from Trump amid his controversial stance on the VA white nationalistic fiasco. Overall, US political & policy paralysis coupled with poor visibility of Trumponomics may be huge negative for the USD & risk assets including equity.

As corporate America is deserting Trump one by one, market may be unnerved as despite so much Trump tantrum, his corporate circle may be one of the elements of confidence boosting among the investors, as they still believed Trump’s ability to deliver his Trumponomics narratives. But, now the whole rhetoric of Trumponomics may be extremely doubtful not only for the ongoing daily US political entertainment, but may be also for limited fiscal maneuver room in the US budget itself.

Even, Trump’s own RNC GOP members now seems to be distancing themselves from the controversial hardcore nationalistic/racist image and all these may be also an indication that days of Trump as US Prez may be over; he may either resign or impeached shortly.

Although, yesterday’s overall US economic data may be mixed, the ongoing US political drama coupled with Cohn’s resignation buzz and above all, the tragic terrorist incident at Spain has made the USD & risk assets (US/global equity) lower. As a result, overnight US market (DJ-30) closed in deep red around 21751 (-1.24%) and SPX-500 now also trading almost flat around 2430 (+0.14%) on geo-political risk aversion.

Looking ahead, SPX-500 now need to sustain over 2420-2415 zone; otherwise 2395-2370 zone may be clearly visible.

Back to home, after opening in deep red, Indian market is now in further stress following surprised (?) resignation of Infy CEO Vishal Sikka amid an environment of trust deficit & repeated interference in the functioning of the Co by its founders. Although, Sikka has been reappointed as an executive VC, the role may be not clear for the market/investors.

Sikka was instrumental in reviving the performance of Infy, since he took over in 2014 and market has a great trust in his ability; thus his sudden resignation amid corporate governance & share buyback issues may have left the investors in jittery and subsequently Infy is down today by almost 7%, dragging the Nifty index by over 42 points alone. His resignation may also trigger more attrition among other key Infy people.

After Tata Sons fiasco with Mistry, this Infy incident may also raise concerns among the investors for the overall corporate governance of Indian promoters or legacy founders and their relationship with the professional CEOS in their cos, who are supposed to work for the betterment of the co independently without much interference from the founders and is answerable only to the board.

Thus, it may be best for the family oriented large Indian cos to appoint someone eligible within their family as CEO rather than taking service of an outsider, who may not be their “yes man” always; founders’ family have to come forward directly to manage their own co at driver’s seat, rather than trying to operate it through a remote control.



SGX-NF


SPX-500

Thursday, 17 August 2017

Nifty Pared Gains & Closed Almost Flat Helped By Infy But Dragged By Banks After A Moderate Day Of Volatility Tracking Weak Global/EU Cues



Market Wrap: 17/08/2017 (17:00)

NSE-NF (Aug):9914 (+9; +0.09%) (TTM PE: 25.07; Nr. 2 SD of 25; Avg PE: 20; TTM EPS: 395; NS: 9904)

NSE-BNF (Aug):24295 (-180; -0.74%) (TTM PE: 30.49; Abv 3 SD of 30; Avg PE: 20 TTM EPS: 795; BNS: 24237)

For 18/08/2017: 

Key support for NF: 9865-9815

Key resistance for NF: 9950-9980/10005

Key support for BNF: 24250-24150

Key resistance for BNF: 24425-24525

Hints for positional trading:

Time & Price action suggests that, NF has to sustain over 9980 area for further rally towards 10005/10035-10095 & 10115-10160 area in the short term (under bullish case scenario).

On the flip side, sustaining below 9950 area, NF may fall towards 9895/9865-9815 & 9765-9705 area in the short term (under bear case scenario).

Similarly, BNF has to sustain over 24525 area for further rally towards 24600-24725 & 24900-25025 area in the near term (under bullish case scenario).

On the flip side, sustaining below 24475-24425 area, BNF may fall towards 24250-24150 & 23950-23850 area in the near term (under bear case scenario).

Nifty Fut (Aug) today closed around 9914, almost unchanged (+0.09%) after a moderate day of volatility, in which it made an opening session high of 9940 and mid session low of 9882. Indian market (Nifty Fut-Aug) today opened in slight gap up around 9927 (+20 points) tracking muted global cues but some RBI/Govt sops of farm loan for certain categories & a hawkish RBI minutes, dashing for any further rate cut hopes in 2017.

But, after trading strong for the fast few hours, it came under some selling spree on weak opening of EU market as EUR got strong amid US political jitters & a dovish FOMC minutes coupled with some adverse new flow both in national & international media about the ongoing India-China border standoff in various LOC, which may take serious geo-political turn at any point of time despite regular flag meetings between the two armies.

Also, concern of shell cos & Govt’s war on black money, muted Q1FY18 earnings and RBI tightening on NPA coupled with restriction of fresh commercial lending, especially to various real estate developers may have adversely affected the Indian market sentiment today and without contribution from Infy, VEDL & HDFC, Nifty could have ended in moderate red; these 3 cos has contributed almost +42 points in Nifty.

Indian market may have today focused on RBI/Govt sops for some categories of farm loan (discounts in interest rate), which may be positive for PSBS and also some selected private banks having relevant farm loan portfolio.

Indian Market May be Also Dragged By Muted Q1FY18 Earnings And Concern Of Ind-China Border Standoff:

But, muted Q1FY18 Nifty earnings, down by almost 8.4% (YOY) due to adverse report cards from PSBS, Pharma, IT, Automobiles, FMCG, consumer durables & staples for various reasons including a common  cause of Pre-GST disruption may be highly disappointed as Nifty EPS continue to be under the 400 mark for several years despite so called green shoots.

Looking ahead, Q2FY18 also may not be rosy amid subdued guidance on general slowdown of the economy for challenge in GST adaption, especially by small traders, DeMo blues (war on black money) and resultant formalization of the economy, which may also delay the overall economic recovery.

For now, Govt capex is supporting the GDP, but ongoing euphoria about farm loan waivers in various states may be also affecting the State Govt capex now and in turn, Central Govt capex may be also in pressure coupled with increasing expenditure on PSBS recapitalization & infra/defence spending and lower revenue from telecom sector.
Thus, an extended slowdown in consumption, private investments, hiring & earnings downgrade can’t be ruled out; market may be assuming very high EBITDA margin & profitability for FY: 18-20, which may be far from reality!!

Also, a hawkish RBI minutes released yesterday may have dashed the hope of any further rate cuts by MPC in 2017 and coupled with that, US political risk, Trump’s NK narratives to divert attention from his political drama, ongoing border tensions with China-India and an eventual Fed/ECB QT from 2018 may be some of the headwinds for the Indian market despite power of domestic liquidity, which may be also in question amid Govt’s war on black money, eyeing for the 2019 general election.

Nifty was today supported by Infy (buyback offer shortly), VEDL (upbeat metals for global growth optimism & China supply constraint), HDFC, IOC, NTPC, Bharti Airtel (some telecom sops buzz by the Govt/IMG & extension of spectrum payment period at reduced bank interest rate), ITC , Eicher Motors & RIL ( no fresh notice from the Govt demanding for more fines; all the disputed amount are under BS provision and arbitration).

Nifty was dragged by HDFC Bank, Adani Ports, Maruti, Kotak Bank, Yes Bank, L&T, Indusind Bank, Tata Motors, Cipla, SBI, Bosch & HUL.

Overall banks, FMCG, Pharma stocks dragged Nifty, while IT counters helped it a lot today. Bank Nifty today saw a sharp sell off at the closing hours, dragging the overall market may be due to weekly exp day volatility on today (Thursday) coupled with a hawkish RBI minutes released yesterday and pessimistic outlook for the overall banking sector amid high NPA from corporate to retail & muted credit growth and pressure of RBI to transmit more rate cuts.

Pharma stocks were under pressure today due to concern of adverse new Pharma policy on Indian drug makers, which are accused of exorbitant prices & sub-standard quality by various generic cos for decades.

Globally, most of the major Asian markets barring China & South Korea were trading in red tracking muted global cues after Trump dissolves all his business advisory council in an epic turn of US politics & the tragic VG incident following resignation of all the leading members (prominent business heads & CEO) amid an environment of intolerance, racism & violence and Trump’s stance on the whole affairs.

This may be a huge blow to Trump & his narratives of Trumponomics as these business councils were one of his strength despite daily political drama. These councils were formed with much fanfare after Trump took charge of the oval office to guide his administration in areas of trade, tax reforms, deregulations and investments in US to help US employment & to “make America great again”.

Thus, this disbanding of Trump’s strategy & policy council may be a serious blow to his presidency and eventually, he may resign coupled with rising pressure on his alleged Russian links investigation. Although, a resignation or an impeachment of Trump may be a temporary black swan event for the marker (risk assets), it may be positive in the long term as an element of daily political entertainment & uncertainty may be removed in his resignation from WH.
Also, yesterday’s FOMC minutes may be termed as dovish as several members are concerned over lower trajectory of US inflation for not only short/midterm, but also for longer term (2 yrs), which is a surprise as Fed/Yellen thinks the current subdued inflation is transitory & also idiosyncratic.

Fed is also concerned over rising asset (stock) prices as it has eased financial conditions despite multiple rate hikes by 3 times in the last 6 months. But, FOMC minutes yesterday also virtually confirmed a gradual BS tapering in the “upcoming” policy meets, most probably from either Sep or Dec’17, starting with no reinvestments of the matured bond amount principle and then gradually selling un-matured bonds in the market.

Fed may be also concerned over tepid private/public investments in US due to fiscal policy uncertainty and poor visibility of Trumponomics amid intense US political turmoil almost on daily basis.

Thus, Fed may not take the risk of dual QT (both rate hikes & BS tapering) in Dec’17 and will go only for gradual QE/BS tapering first, which may be also equivalent to a rate hike for the US economy as bond yields will surge on the back of greater US TSY bond supplies and if everything, from economics (inflation, GDP, employment/wage growth etc) to politics (Trump & Co) are fine, then Fed may go for further 3 rate hikes in 2018 starting from March’18 (Q1).

Although, Fed may be now taking some excuses of lower US inflation to not hike in Dec’17, several US policymakers have also acknowledged the fact that subdued US wage inflation & CPI may be a structural issue, which can’t be solved by QE alone.

The tepid US wage growth may be a function of ageing US demography, lack of relevant working skills, automation & also globalization. Thus inflation model of 1980’s may not be relevant now and thus the 2% inflation goal may be remained as elusive, unless the Govt stimulate the economy in a structural way; i.e. it needs fiscal stimulus rather than monetary stimulus. The same perception may be also applicable for other G-10 economics including EU & Japan.

All these US economical & political jitters has made the USD lower despite some hawkish effort from Fed’s Mester later in the day arguing for another 2017 rate hike inspite of lower inflation and ECB’s dialing back of Draghi’s QE signal talk at the Jackson Hole Symposium next week. USD is also under pressure from Trump’s rhetoric of trade war with China over NK issues and his narratives on NAFTA involving Canada & Mexico.

A lower USD may be now bad for global markets, most of which are dependent on exports, but it may be also good for US market & economy. Thus, despite so much US political headwinds, US market (DJ-30) yesterday closed almost flat around 22024 (+0.12%); SPX-500 is now trading around 2465, almost flat (-0.05%) on weaker USD ahead of ECB minutes today.

US market is also being supported by upbeat earnings, but the rally may not be broad based and may be limited to few stocks, having greater weightage on the index. FFR is now showing only a 40% probability of a Dec’17 rate hike, down from around 50% just before the FOMC minutes. A lower USD is positive for US earnings.

Elsewhere, Australia (ASX-200) closed around 5779, almost flat (-0.10%) on higher AUDUSD amid upbeat commodities and AU employment report. Telecom sector is also dragging the AU market today after Telstra slashed its dividend by 30% for 2017.

Japan (Nikkei-225) closed around 19703 (-0.14%) on lower USDJPY (higher Yen), which is negative for its export oriented economy. JPY today got more strength after an upbeat JP trade data, reflecting robust export (+13.2%) to China & US and also solid domestic demand (private consumption) amid good import (+16.3%). Today’s JP trade data may be also good for global economic recovery narrative along with Japan despite an overall strong Yen.

China (SSE) was trading around 3268, in deep green (+0.68%) on upbeat earnings of tech shares and metal optimism. Today PBOC fixed USDCNY slightly lower at 6.6709 vs 6.6779 yesterday and made a net injection of 50 bln Yen through its daily OMO. Metals are upbeat on perception of strong global demand & tight supplies coupled with lower USD.

Hong-Kong (HKG-33) was trading almost flat around 27345 (-0.20%) on lower USD, but upbeat tech shares amid strong earnings by Tencent and miners; but oil/energy related sectors may be in pressure today.

South-Korean market (Kospi) also surged by 0.65% after NK’s Kim back off from his Guam missile attack rhetoric and subsequent cool down by Trump, terming Kim’s decision as “wise” and avoided a “catastrophic” war situation.  SK’s Prez also warned NK about crossing the red line, if it go ahead with a nuke ready ICBM test, but has also remind that US will have to take Seoul’s approval for any military action on NK. 

Meanwhile, Crude Oil (WTI) was trading around 46.78, almost flat (+0.10%) after overnight plunge from around 47.98 tracking mixed inventory report amid surprised crude drawdown, but unexpected gasoline storage & US oil production surge.

Asian Market Update:  

FX UPDATE:



SGX-NF


BNF




GBPUSD