DAILY ASIA-PAC OPENING NEWS

26th September 2018

UK

UK PM May said it is not in the national interest to have a general election, and again rules out second referendum and she is not bluffing a that a no-deal is better than a bad deal or a Canada-style deal. (Newswires)

EU document stated EU and Britain should have free trade area between them, but it cannot extend to the whole of Britain, while the document added the Chequers proposal would give UK unfair competitive advantage in the goods market. (Newswires)

UK Labour party have voted to keep open the option of a new Brexit referendum at their party conference. (Newswires)

UK PM May is said to lay out a speech tomorrow in regarding plans to cut UK corporate tax rates to the lowest in G20 in an attempt to make UK “one of the most business-friendly economies in the world”. (Newswires)

EU

Italy’s Deputy PM Di Maio says the budget is to raise lowest pensions to EUR 780/month while he added he his group will not back 2019 budget targets if requests are not met adding citizens income and pension reform must be accounted for. (Newswires)

CENTRAL BANKERS

BOE’s Vlieghe said that they are not at the point yet that the BoE would change its smooth Brexit assumptions, while he added his own central forecast of 1-2 rate hikes per year is broadly right assuming wage and productivity growth picks up. (Newswires)

Riksbank’s Jansson said if the central bank moves too quickly ahead of the ECB, SEK would strengthen too quickly, while he added the Riksbank may have to raise unemployment forecasts slightly in October. (Newswires)

Norges Bank’s Olsen said that rate hikes can be expected to be gradual and is a response to the solid activity in the Norwegian economy. (Newswires)

Argentina’s Central Bank Governor has presented his resignation as according to a statement. (Newswires)

COMMODITIES

US President Trump said OPEC and Non-OPEC are ripping off the rest of the world and wants them to stop raising oil prices. UAE official responded to Trump’s criticism of OPEC by saying prices are driven by markets. (Newswires)

NHC says Tropical Storm Rosa is likely to become a Hurricane by Wednesday; Note: Rosa is located in the Eastern North Pacific. (Newswires)

Goldman Sachs forecasts Brent will be back in the USD 70-80 range into the year-end. (Newswires)

US API Weekly Crude Stocks (21 Sep) +2.903M (Exp. -1.300M, Prev. +1.249M)

US API Weekly Gasoline Stocks (21 Sep) +0.949mln (Exp. +0.800mln, Prev. -1.485mln)

GEOPOLITICS

US President Trump says looking forward to having a great relationship with Iran, but they have to change their rhetoric, while he added more Iran sanctions will follow after resumption of oil sanctions on Iran on November 5th. Regarding North Korea, Trump said the US is in process to set a meeting with the country. (Newswires)

US National Security Advisor Bolton warned that US is watching Iran and added “we will come after you” if they cross the US or its allies. Bolton added the enforcement of sanctions will be aggressive and unwavering and will not be undermined by Europe or anybody else. (Newswires)

Iranian President Rouhani questioned how Iran can enter into an agreement with US President when it violates the policies of its predecessor; and added dialogue is important, while he invited the US back to the negotiating table. (Newswires)

US

US Trade Representative Lightizer said the US-Mexico trade deal will rebalance the US trade deficit with Mexico; while he added there is still an amount of issues between Canada and the US as Canada is not making concessions on key issues and time is running out. Lightizer added the US will deal with steel and aluminium tariffs after NAFTA is resolved. (Newswires)

US Trade Advisor Navarro said he expects a vote on the final NAFTA deal after November; while added small things are holding up a big trade deal with Canada and adds trade will be discussed with the EU at the G20. (Newswires)

Canadian PM Trudeau said there is a possibility for Canada to build on the US-Mexico deal at NAFTA talks; while he added the US threat of auto tariffs is a tool that Trump can use. (Newswires)

MARKET RECAP

Abiomed (ABMD) up on strong performance of Impella heart pumps. Northrop Grumman (NOC) was buoyed with other defence names while US President Trump gave a typically ‘America First’ speech at the UN. Energy names were supported by continued strength of crude (BHGE). McDonald’s (MCD) was higher after Monday announcing a new organisational structure. Nike (NKE) was higher ahead of AMC earnings. Automakers (GM, F, FCAU) were lower after BMW (BMW GY) cut guidance. Some chipmakers – like Intel (INTC), Microchip Technology (MCHP) – were under pressure after a sector downgrade at Raymond James and Keybanc. Centurylink (CL) CFO departed to oversee the Sprint (S) T-Mobile (TMUS) merger, sending shares lower. Financials were trading firmer early doors as yields rose in anticipation of a Fed hike on Wednesday, though struggled to hold on to the highs. Defensive utilities were under pressure. In M&A, sonic Corp (SONC) jumped after Inspire Brands acquired the company for $1.6bln. Square (SQ) introduces Square payroll app, putting pressure on Automated Data Processing (ADP), Paychex (PAYX), eBay (EBAY).

* SPX -0.1% at 2916, NDX +0.2% at 7563, DJI -0.25% at 26495. SECTORS: Energy +0.5%, Materials -0.5%, Industrials -0.3%, Cons Discretionary +0.6%, Cons Staples -0.8%, Healthcare -0.3%, Financials -0.4%, Tech -0.0%, Telecoms +0.1%, Utilities -1.2%.

The Treasury complex drifted lower on Tuesday, pushing the 10yr yield to a four-month high ahead of the FOMC meeting tomorrow where the MPC is widely expected to hike rate by 25bps. Most of the selling action was concentrated in the front-end and belly of the curve where yields were higher by c.2bps at settlement. 2s10s, 2s30s and 5s30s were all narrower by c1bps. Today’s 5yr note auction tailed by 0.4bps; the bid-to-cover came in at 2.997 showing demand was uninspiring and at the lowest since December. Indirects were awarded the smallest share since May, directs took the highest portion since June and similarly dealers were left with the biggest share since May. On Thursday the US Treasury will auction USD 31bln in 7yr notes. * US T-NOTE FUTURES (Z8) SETTLE 5+ TICKS LOWER AT 118-14+.

(Newswires)