US & APAC reopening stocks fly, ASX200 hits all time high as we predicted. Yen, Lithium and Tesla on watch US & APAC reopening stocks fly, ASX200 hits all time high as we predicted. Yen, Lithium and Tesla on watch US & APAC reopening stocks fly, ASX200 hits all time high as we predicted. Yen, Lithium and Tesla on watch

US & APAC reopening stocks fly, ASX200 hits all time high as we predicted. Yen, Lithium and Tesla on watch

Equities 6 minutes to read
APAC Research

Summary:  US equites move above key levels with reopening stocks charging, pushing the S&P500 back above its 50-day moving average and ready for another rally . Broad Asian stocks remain on the backfoot, but reopening stocks spread their wings further. The Australian share market hit its highest level in history as we predicted, and will likely set higher levels. US treasury yields peak, so tech investors remain selective. As global lithium prices surge, we cover the lithium stocks to watch ahead of Tesla's result, with the company likely to takeover a lithium mine.


What’s happening in equites that you need to know?

US equites charged above key levels on Tuesday. The key theme driving the market is that the reopening theme is being bought the most, and the stay home economy stocks are losing love. Ammunition was added to this after Biden plans to rid mask wearing on US planes. As for the sectors, Leisure and Hotel REITs rose over 5%, while the safe haven Gold sector closed down, after gold fell 1.4%. The S&P 500 (US500.I) rose 1.6%, moving above its 50-day moving average, flagging a new short term bullish run could start (as indicated by MACD, RSI). While the Nasdaq 100 (USNAS100.I) rose 2.1%, but traders are hesitate to go all in as the index is still under its 50-day average, pressured by rates rising.

Hong Kong and China equities in lackluster trading. Hang Seng Index (HSI.I) and CSI 300 Index (000300.I) hovered around the low end of their recent ranges in lackluster trading.  Coal, gold and other mineral mining stocks fell, losing 3% to 9%.  China’s largest EV battery maker, CATL (300750) fell almost 7%, despite the gradual resumption of  production at Tesla’s Shanghai factory from yesterday. CATL is reporting results tomorrow. Everbright Securities (06178) fell 3% following its announcement of a management reshuffle.  The market continues to be disappointed by the moderate patchwork kind of stimulus initiatives from the Chinese authorities.  China’s National Interbank Funding Centre announced that banks’ Loan Prime Rates (LPR) remain unchanged at 3.7% for 1-year loans and 4.6% for 5-year loans.

Rest of the Asian stocks remain on the backfoot. MSCI Asia Pacific (FMEAM2) was down for a third consecutive day. Singapore’s Straits Times Index STI (ES3) was in gains at the open as Genting Singapore (G13) continued to push higher. The reopening gains are spreading across Asia with Thailand now removing mandatory Covid-19 testing for international visitors. Japan’s Nikkei (NI225.I) was also up 0.5%, with automakers Suzuki (7269), Mazda (7261), Nissan (7201) and Toyota (7203) in gains and Fast Retailing (9983) also making a comeback.

The Australian share market trades at Its highest level in history and will likely hit higher levels supported by the commodity super cycle push. Today, the ASX200 is up 0.3%, extending its uptrend for the 4th day. The theme of the day? Covid restrictions are easing again, with VIC and NSW ending isolation periods for close contacts, this is helping CTD, FLT and WEB shares rise 2%, while their also supported by Biden’s de-mask on US planes push. Elsewhere, Private hospital company Ramsay Health (RHC) shares surged 26% after KKR offered A$20 billion to takeover the company, for A$88 a share. RHC shares have been out of favour since COVID elective surgery restriction were in place. And today that changed with RHC shares hitting an all-time high. Whitehaven Coal (WHC) shares also continued their uptrend, rising 1.8% after the coal miner upgraded its outlook, seeing higher thermal and metallurgical coal prices in CY22 and CY23. We continue to think WHC is a key coal stock to watch that will likely see further share price growth.

US Treasury yields surged across the curve. Short-end rates leading the way higher with 2-year rates up 15-basis points to 2.6% and 30-year benchmark cracking above the key psychological level of 3%. 10-year yields have pushed to 2.96%. Markets (based on Fed funds futures) have priced in an increasing odd of 3 consecutive 50-basis points hike each during the next Fed FOMC meetings on 4 May, 15 June & 27 July. Still watching Fed Chair Powell’s comments due on Thursday.

Headline risk from the war can increase as Donbas region is now in focus. Russia seems to be in a stronger position now, and this could mean more risk aversion and possibly more sanctions. Crude oil (OILUKJUN22 & OILUSMAY22) prices steady in the Asian session with WTI above $103/barrel and Brent near $108.

What you need to consider

Global lithium stocks are in focus. The Lithium Price Index (a measure of the lithium prices) is at its highest level in history, supporting lithium stocks share price growth. We believe the lithium price is likely to set higher prices this year, given the supply deficit. Morgan Stanley is of the same view too, however Morgan Stanley sees a return to surplus lithium in 2023. However we think although the lithium price is likely to set higher levels this year, it’s likely to continue to rise over the longer term as the International Energy Agency (IEA) wants to ban fuel consumption engine sales by 2050.

Yen risks are surging again as BoJ defends the yield target. USDJPY is in close sight of 130 and the Bank of Japan’s fresh round of unlimited bond buying to cap yields in 10-year Japanese government bonds (JGBs) is likely to further weigh on the yen. As verbal interventions from the Bank of Japan and Ministry of Finance fail to be heard, we are looking at a subtle policy shift with the aim to manage volatility, or a real physical intervention. But both of these will only be a temporary fix at best, and any relief rally will likely be short-lived.

Trading ideas to consider

Lithium stocks to watch:  With Elon Musk putting the spotlight on the lack of lithium supply, and rising demand, which is pressuring lithium prices to all time highs, you should keep lithium stocks on your radar. Elon Musk, previously hinted Tesla (TSLA) could move into lithium mining to offset some of these costs. So you’d expect Telsa to potentially takeover a lithium company, that is based in the USA. Potentially takeover targets in the US might include Piedmont Lithium (PLL), Jindalee Resources (JRL) and Lithium Corporation (LTUM).

Earnings to watch. Key earnings to watch today will be ASML (ASML), which will give us an insight into the state of the semiconductor sector where supply chains are still stretched due to excess demand. Focus is also on Tesla (TSLA) where a lot is at stake. Production is being constrained in China due to lockdowns and globally by component shortages for cars. Soaring lithium and aluminum prices have forced Tesla to hike prices multiple times recently and the question is to what extent it has impacted demand.

Key APAC economic releases to watch;

Wed, Apr 20: Japan March trade, China 1-year and 5-year loan prime rates

Thu, Apr 21: HK March unemployment rate

Fri, Apr 22: HK March CPI, RBI meeting minutes

Quarterly Outlook 2024 Q3

Sandcastle economics

01 / 05

  • Macro: Sandcastle economics

    Invest wisely in Q3 2024: Discover SaxoStrats' insights on navigating a stable yet fragile global economy.

    Read article
  • Bonds: What to do until inflation stabilises

    Discover strategies for managing bonds as US and European yields remain rangebound due to uncertain inflation and evolving monetary policies.

    Read article
  • Equities: Are we blowing bubbles again

    Explore key trends and opportunities in European equities and electrification theme as market dynamics echo 2021's rally.

    Read article
  • FX: Risk-on currencies to surge against havens

    Explore the outlook for USD, AUD, NZD, and EM carry trades as risk-on currencies are set to outperform in Q3 2024.

    Read article
  • Commodities: Energy and grains in focus as metals pause

    Energy and grains to shine as metals pause. Discover key trends and market drivers for commodities in Q3 2024.

    Read article
Disclaimer

The Saxo 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 is not intended to and does not change or expand on this. 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 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 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 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 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 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-hk/legal/disclaimer/saxo-disclaimer)

None of the information contained here constitutes an offer to purchase or sell a financial instrument, or to make any investments. Saxo does not take into account your personal investment objectives or financial situation and makes no representation and assumes no liability as to the accuracy or completeness of the information nor for any loss arising from any investment made in reliance of this presentation. Any opinions made are subject to change and may be personal to the author. These may not necessarily reflect the opinion of Saxo or its affiliates.

Saxo Capital Markets HK Limited
19th Floor
Shanghai Commercial Bank Tower
12 Queen’s Road Central
Hong Kong

Contact Saxo

Select region

Hong Kong S.A.R
Hong Kong S.A.R

Saxo Capital Markets HK Limited (“Saxo”) is a company authorised and regulated by the Securities and Futures Commission of Hong Kong. Saxo holds a Type 1 Regulated Activity (Dealing in Securities); Type 2 Regulated Activity (Dealing in Futures Contract); Type 3 Regulated Activity (Leveraged Foreign Exchange Trading); Type 4 Regulated Activity (Advising on Securities) and Type 9 Regulated Activity (Asset Management) licenses (CE No. AVD061). Registered address: 19th Floor, Shanghai Commercial Bank Tower, 12 Queen’s Road Central, Hong Kong.

Trading in financial instruments carries various risks, and is not suitable for all investors. Please seek expert advice, and always ensure that you fully understand these risks before trading. Trading in leveraged products may result in your losses exceeding your initial deposits. Saxo does not provide financial advice, any information available on this website is ‘general’ in nature and for informational purposes only. Saxo does not take into account an individual’s needs, objectives or financial situation. Please click here to view the relevant risk disclosure statements.

The Saxo trading platform has received numerous awards and recognition. For details of these awards and information on awards visit www.home.saxo/en-hk/about-us/awards.

The information or the products and services referred to on this site may be accessed worldwide, however is only intended for distribution to and use by recipients located in countries where such use does not constitute a violation of applicable legislation or regulations. Products and services offered on this website are not directed at, or intended for distribution to or use by, any person or entity residing in the United States and Japan. Please click here to view our full disclaimer.

Apple, iPad and iPhone are trademarks of Apple Inc., registered in the US and other countries. AppStore is a service mark of Apple Inc. Android is a trademark of Google Inc.