APAC Market Digest Feb 18: Gold stocks rally, plus why we’re bullish on AUD APAC Market Digest Feb 18: Gold stocks rally, plus why we’re bullish on AUD APAC Market Digest Feb 18: Gold stocks rally, plus why we’re bullish on AUD

APAC Market Digest Feb 18: Gold stocks rally, plus why we’re bullish on AUD

Equities 8 minutes to read
Jessica Amir

Market Strategist

Summary:  The Australian stock market outperforms global markets this week as Gold stocks up their ante, with sophisticated investors buying in. We also look at this week’s best performing stocks on the ASX, including a property stock, and a scrap metal recycling company. Plus, why investors are buying the Aussie dollar, which we are bullish on. Australia exits coal earlier than expected and China announces it will ramp up production. APAC considerations and trading ideas are below.

What’s happening in markets?

  • The Nasdaq 100 (USNAS100.I) and S&P 500 (US500.I) sank into the red overnight, both falling over 2%. Week to date, the Nasdaq is 0.5% down, the S&P500 is down 0.8%. The overnight drop came after reports swirled that Russia could invade Ukraine ‘any day now’ (US National Security Advisor). The next lower levels to watch are 14,000-13,700 for the Nasdaq 100, and 4,354 for the S&P 500 index. Noteworthy stock movers include Nvidia (NVDA) falling 7.8% despite its sales and earnings beating expectations. Tesla (TSLA) shares fell over 5% after a consumer report ranked the electric vehicle (EV) maker 22rd out of 32 brands, down seven spots compared to the year before. Subaru (FUJHY) was voted number one, Mazda (MZDAY) was second, BMW (BMW) third. As for the ‘top pick’ for the best electric vehicle, Ford (F) came out on top.
  • The Australian share market ASX200 (ASXSP200.I) fell 0.9% by Midday Friday, but holds onto a weekly gain of 0.4% thanks to better than expected results this week, including from metal recycling company; Sims Metals (SGM) with its shares up 20%, while retail property group Vicinity Centres (VCX) shares rose 12% on signaling a retail recovery is underway. Wine giant Treasury Wine Estates (TWE) shares rose 12% week to date after brand Ambassador, Snoop Dog helped to lift US sales, offsetting weaker Chinese sales. It’s also vital to know, this week six of the top ten performers are gold stocks; including  Silver Lake Resources (SLR), Northern Star (NST) Evolution Mining (EVN) all up over 14% each. It comes as investor are rushing into Gold (XAUUSD) which hit $1,900 (an 8 month high) on the back of safe haven demand rising, amid Russia/Ukraine tension. Also keep in mind, gold has outperformed equities in all interest rate hike cycles since 1972.
  • Hong Kong’s Hang Seng (HK50.I) and China A shares: Hong Kong stocks and A Shares ended yesterday with modest gains despite volatility due to news reports about Ukrainian military allegedly firing mortar shells and grenades at rebel localities in the Donbas region. Standard Chartered Bank (02888.HK) reported below expectation 4Q results which were dragged down by weaker non-interest income and impairment of investment in China Bohai Bank. Its shares fell 2.2%. EV batteries and non- were among the top gainers. Ganfeng Lithium (01772.HK) was up 7.6%, BYD (01211.HK) up 2.7%, Chalco (2600.HK) up 5.2%. In A shares, ESG, lithium, solar and infrastructures outperformed. Overnight, following the sell-off in the U.S. markets in response to President Biden’s warning about imminent Russian invasion into Ukraine, most ADRs fell over 1%. Written by Redmond Wong in Hong Kong.
  • Commodities:
    • Crude oil (OILUSMAR22 & OILUKAPR22) is in a tug of war and holds at $91.76 a barrel. On one side, pressuring oil lower; are talks with Iran that resurrected, which could see South Korea import Iranian oil. On the other side, pressuring oil higher, is the lack of global supply, increasing demand as global mobility increases and of course, there’s heightened tensions between top energy exporter Russia and the West over Ukraine.
    • In Iron ore (SCOH20) news, its price has slipped 1.3% to $129.90. Iron ore shipments from Australia fell from 17 million tones in a week to 15 million tones (for the week to February 4), somewhat in line with our expectations as the Beijing winter Olympics are on. As reported last and this week, we also anticipate the iron ore price to pull back further, before resuming its long term rebound and uptrend.
    • BHP (BHP) the world’s biggest iron ore company trades 0.2% higher today, ahead of paying a record dividend next month. BHP’s shares look supported to move higher and continue its long-term rally from the November low. It’s also worth nothing, from a  technical perspective, BHP’s shares flagged a technical signal (a golden cross) suggesting its rally is also supported.

What to consider

  • In Energy news; Australia will exit coal earlier than expected, while China signals it wants to ramp up supply. Origin (ORG) announced it will shut down Australia’s largest coal-fired power station in 2025, seven years ahead of schedule to curb emissions. A similar thing occurred in in 2017, when AGL (AGL) warned it would close its NSW’s coal-fired power station earlier than planned. The government in power at the time stepped in, and AGL kept the station running (mostly). In April 2022, AGL’s NSW coal fired power station will finally close. And both AGL and ORG aim to pivot to producing green energy (hydrogen) at their closed facilities. This highlights the lack of coal supply in the market. While demand mounts as coal is increasingly needed to moderate extreme weather. The EIA says coal demand will hit another record this year. China, India and Russia are the key buyers, with 70% of their energy being from coal. Overnight, it seems, China responded, announcing it will increase production and run their local coal-fired power plants at full capacity, despite the country vying to reduce emissions.
  • Hong Kong & China A share markets: Hong Kong & China A share markets:
    • Renminbi: According to SWIFT, renminbi was at the position of number 4 with a share of 3.2% in international payments via SWIFT, almost doubled from the 1.65% level two years ago . The rise was largely attributable to foreign buying of Chinese government bonds over the past couple of years. Russian oil company Gazprom Neft’s jet fuel subsidiary said this week that it has switched to accepting renminbi in settlements for refueling flights of Russian airlines in China.
    • Chinese Property: A lower-tier city in the Shandong province was reported to have reduced home down-payment ratio for first-time home buyer to 20%, down from 30%.  It would be interesting to monitor if the same will be happening in larger cities in coming months.   Written by Redmond Wong in Hong Kong.

Trading ideas

  • The Australian dollar (AUDUSD):  We are increasingly seeing fund managers and superannuation funds buy the AUDUSD for their portfolios, which has taken the Australian dollar to a three week high. Since November last year, the Aussie dollar has been ho-humming around 71.79 US cents but now...the times are changing and we’re increasingly bullish on the Aussie dollar rising over the long term. Why? Well firstly Australia opens its international borders next week, for the first time since COVID-19 began. Secondly, Australia has one of the strongest balance sheets (also known as the 'balance of trade', as Australia exports more than its imports) and this is attractive to foreign investors. Thirdly, China is likely to increase its Australian commodity buying, as it’s relaxed its steel emissions target by 5 years (iron ore is the key ingredient of steel and Australia is the largest iron ore exporter). Also supporting commodity demand, are the easing monetary conditions in China, with their central bank expected to drop interest rates again. And fourthly the AUD is being supported higher by soft commodities (wheat, sugar, cattle, poultry), prices surging to records. Australia is a large exporters of these, while the Australian government is expected to provide more support to Australian industry, as it wants to grow Australia Agriculture to a $100 billion industry by 2030.
  • Asia: We continue to find energy, industrial and EV metals, precious metals and infrastructure interesting amid an overall risk-off environment.  Written by Redmond Wong in Hong Kong.

For a global look at markets – tune into 
our Podcast 

For prior Australian market and APAC updates - click here. 


The Saxo Bank Group entities each provide execution-only service and access to Analysis permitting a person to view and/or use content available on or via the website. This content is not intended to and does not change or expand on the execution-only service. Such access and use are at all times subject to (i) The Terms of Use; (ii) Full Disclaimer; (iii) The Risk Warning; (iv) the Rules of Engagement and (v) Notices applying to Saxo News & Research and/or its content in addition (where relevant) to the terms governing the use of hyperlinks on the website of a member of the Saxo Bank Group by which access to Saxo News & Research is gained. Such content is therefore provided as no more than information. In particular no advice is intended to be provided or to be relied on as provided nor endorsed by any Saxo Bank Group entity; nor is it to be construed as solicitation or an incentive provided to subscribe for or sell or purchase any financial instrument. All trading or investments you make must be pursuant to your own unprompted and informed self-directed decision. As such no Saxo Bank Group entity will have or be liable for any losses that you may sustain as a result of any investment decision made in reliance on information which is available on Saxo News & Research or as a result of the use of the Saxo News & Research. Orders given and trades effected are deemed intended to be given or effected for the account of the customer with the Saxo Bank Group entity operating in the jurisdiction in which the customer resides and/or with whom the customer opened and maintains his/her trading account. Saxo News & Research does not contain (and should not be construed as containing) financial, investment, tax or trading advice or advice of any sort offered, recommended or endorsed by Saxo Bank Group and should not be construed as a record of our trading prices, or as an offer, incentive or solicitation for the subscription, sale or purchase in any financial instrument. To the extent that any content is construed as investment research, you must note and accept that the content was not intended to and has not been prepared in accordance with legal requirements designed to promote the independence of investment research and as such, would be considered as a marketing communication under relevant laws.

Please read our disclaimers:
- Notification on Non-Independent Investment Research (https://www.home.saxo/legal/niird/notification)
- Full disclaimer (https://www.home.saxo/en-gb/legal/disclaimer/saxo-disclaimer)

Saxo Markets
40 Bank Street, 26th floor
E14 5DA
United Kingdom

Support Centre
For existing clients, please click here to request support via the Support Centre.

Have a question about our products, platforms or services? Visit the Support Centre to find answers for our most frequently asked questions. If you are still unable to locate an answer to your question, you will also find contact details for your local Saxo office to speak with a representative.

Contact Saxo

Select region

United Kingdom
United Kingdom

Trade Responsibly
All trading carries risk. To help you understand the risks involved we have put together a series of Key Information Documents (KIDs) highlighting the risks and rewards related to each product. Read more
Additional Key Information Documents are available in our trading platform.

Saxo Markets is a registered Trading Name of Saxo Capital Markets UK Ltd (‘SCML’). SCML is authorised and regulated by the Financial Conduct Authority, Firm Reference Number 551422. Registered address: 26th Floor, 40 Bank Street, Canary Wharf, London E14 5DA. Company number 7413871.

This website, including the information and materials contained in it, are not directed at, or intended for distribution to or use by, any person or entity who is a citizen or resident of or located in the United States, Belgium or any other jurisdiction where such distribution, publication, availability or use would be contrary to applicable law or regulation.

It is important that you understand that with investments, your capital is at risk. Past performance is not a guide to future performance. It is your responsibility to ensure that you make an informed decision about whether or not to invest with us. If you are still unsure if investing is right for you, please seek independent advice. Saxo Markets assumes no liability for any loss sustained from trading in accordance with a recommendation.

Apple, iPad and iPhone are trademarks of Apple Inc., registered in the U.S. and other countries. App Store is a service mark of Apple Inc. Android is a trademark of Google Inc.