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Global Equities Roundup: Market Talk

29 Jan 2017 9:07 pm

2108 GMT [Dow Jones] Perseus Mining's (PRU.AU) weaker outlook for gold production from its African operations has Canaccord Genuity pondering its cash position. Perseus has flagged 2H production of 90,000-110,000 troy ounces, down from prior guidance of up to 145,000 oz and below Canaccord's 123,000 oz forecast. "The downgrade to 2H guidance negates our previous turnaround expectations, which were a key part of our investment case," Canaccord says. It expects negative cash flow again in the March quarter. "But we note such (working capital) tightness could be alleviated by an upsized debt facility, which is reportedly nearing finalization," Canaccord says. It drops Perseus to speculative buy from buy, and lowers its price target by 13% to A$0.65/share. PRU last traded at A$0.36. (david.winning@wsj.com; @dwinningWSJ)

2105 GMT [Dow Jones] "In the Trumposphere," NAB says, the US President signed an executive order making major changes to America's policies on refugees and immigration. Trump suspended the US refugee program for 120 days, banned all immigrants from seven Muslim countries for 90 days and ordered his administration to develop "extreme vetting" measures for immigrants from those countries to keep "radical Islamic terrorists" out of America. This is bound to reverberate with a risk of tit-for-tat responses that might result in a ban on US citizens traveling to those countries most affected. "These actions do have the potential to undermine global risk sentiment," NAB adds. (james.glynn@wsj.com; Twitter @JamesGlynnWSJ)

2100 GMT [Dow Jones] Donald Trump's signing of yet another executive order, this time barring citizens of seven countries from entering the U.S., will undoubtedly rattle nerves, says ANZ. While this one has been blocked by judges, and will have its day in court, the orders are coming thick and fast as Trump tries to cement his credentials as a man of action. But it's the political side of things, and Trump's ability to execute his growth plans, where the risks lie, all of which suggests the volatility we have seen will continue, it adds. ANZ expect this week's FOMC meeting to be more upbeat, acknowledging Trump's ambitions plans to some degree, which should help put a line under recent USD weakness, and put continued upward pressure on bond yields. (james.glynn@wsj.com; Twitter @JamesGlynnWSJ)

2055 GMT [Dow Jones] The Bank of Japan is unlikely to change policy at this week's meeting despite a recent modest pick-up in Japan's inflation, says CBA's head of global currency strategy Richard Grace. News last week that the BoJ have purchased 450 billion yen of JGBs in the most recent period compared to JPY410 billion in the previous period simply reflects the fact that the BoJ is acting as it said it would in its last policy commitment; and that is to keep the ten-year JGB at or close to 0.0%, as opposed to its current rate of 0.084%. "It does not reflect the risk that the BoJ will further ease monetary policy at this week's meeting. The modest upward trend in AUD/JPY, in place since September, does not look threatened," Grace added. (james.glynn@wsj.com; Twitter @JamesGlynnWSJ)

2052 GMT [Dow Jones] AUD/USD has begun trading in Asia slightly stronger. AUD/USD is likely to remain firm early in the week, but then decline under the weight of a stronger USD post Thursday's likely-hawkish FOMC statement, says Richard Grace, global head of currency strategy at CBA. AUD/USD should however see some support after the FOMC statement from the fact that markets are set to see another strong Australian monthly trade surplus, courtesy of higher commodity prices and higher export volumes, he adds. While consensus is for a A$2 billion trade surplus, CBA Research believes it will roll in at A$3 billion, well-up from last month's $1.2 billion surplus, Grace added. (james.glynn@wsj.com; Twitter @JamesGlynnWSJ)

2047 GMT [Dow Jones] The USD is likely to under-perform early in the week, before strengthening on Thursday's FOMC statement, says CBA. The FOMC meeting is sure to have a hawkish tone to it reflective of recent stronger U.S. economic data and President Trump's coming fiscal stimulus, CBA adds. U.S. core inflation has been at-or-above 2.0% for fourteen consecutive months, and the U.S unemployment rate at 4.7% is at or close to full employment; the under-employment rate not-withstanding. The FOMC will remain under pressure to lift the Fed funds rate this year, and the risk is more than the market is currently anticipating, CBA says. (james.glynn@wsj.com; Twitter @JamesGlynnWSJ)

2046 GMT [Dow Jones] New Zealand December trade due at 2145 GMT should not greatly influence NZD/USD or AUD/NZD, says CBA. This week's main local NZD driver will be 4Q employment on Wednesday. In 4Q, CBA expects the jobless rate to dip to 4.8% from 4.9%, and says wage inflation to firm a touch, although remain fairly muted. That modest growth is a function of continued firm net migration, with more record highs posted through 4Q, while the low inflation environment is also tempering the extent of wage increases. "As the labor market continues to tighten we look for more solid wage growth further down the track," CBA added. (james.glynn@wsj.com; Twitter @JamesGlynnWSJ)

2023 GMT [Dow Jones] J.P. Morgan's top executives sent a note to employees Sunday regarding the recent executive orders signed on immigration policy offering its "unwavering commitment" to its employees, according to a memo reviewed by The Wall Street Journal. Over the weekend, the largest U.S. bank by assets reached out to all JPM employees on sponsored visas who may be impacted by the recent orders. "We understand the situation is evolving quickly," according to the memo, and suggested any employees with concerns reach out to their local immigration specialist or human resources team. JPM has around 140,000 employees in the U.S. "We understand that our country, economy and wellbeing are strengthened by the rich diversity of the world around us," according to the memo. (Emily.Glazer@wsj.com; @emilyglazerwsj)

(END) Dow Jones Newswires

January 29, 2017 16:07 ET (21:07 GMT)

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