Markets Insights

Bourses' focus to be on US monetary policy, job data

US Treasury Secretary Steven Mnuchin taking a question during last week's White House press briefing on President Donald Trump's tax-cut plan. The lack of details in the plan has added some uncertainties to the market.
US Treasury Secretary Steven Mnuchin taking a question during last week's White House press briefing on President Donald Trump's tax-cut plan. The lack of details in the plan has added some uncertainties to the market.PHOTO: BLOOMBERG

Closer to home, attention will be on output figures in Asia and local corporate earnings

Stock markets are likely to continue to be kept busy this week, with attention focused on developments in the United States.

All eyes will be on the mid-week Federal Open Market Committee meeting - which could "certainly pivot the attention back to monetary policy", said IG market strategist Jingyi Pan - as well as the US non-farm payrolls data for last month due out on Friday.

On the political front, the lack of details in US President Donald Trump's tax-cut plan has added some uncertainties to the market.

In Asia, worries over tightening regulations continue to play out in China, while figures just released show that growth in the country's manufacturing sector slowed faster than expected, with the National Bureau of Statistics' official Purchasing Managers' Index (PMI) falling to a six-month low of 51.2 last month from March's near five-year high of 51.8.

"For the Asian market that has been concerned about whether we are seeing a plateau in production growth, this release serves as a health check for Asia's anchor," added Ms Pan.

At home, the benchmark Straits Times Index climbed 4.08 points, or 0.13 per cent, to 3,175.44 last Friday - up 35.61 points, or 1.13 per cent, for the week.

All eyes will be on the mid-week Federal Open Market Committee meeting - which could "certainly pivot the attention back to monetary policy", said IG market strategist Jingyi Pan - as well as the US non-farm payrolls data for last month due out on Friday.

The corporate earnings season gathered momentum here with a number of Reits reporting their results for the quarter, along with CapitaLand and United Overseas Bank - the first of the three local lenders to announce results.

UOB rose 1.5 per cent, or 33 cents, to $21.80 last Friday, after posting a 5.4 per cent increase in first-quarter earnings to $807 million. An OCBC Investment Research report kept its "hold" rating on the stock, noting "the worst from oil and gas appears to be over, even though the operating environment could remain tough".

DBS Group Holdings will release first-quarter results tomorrow, followed by OCBC Bank on May 9.

Rigbuilder Sembcorp Marine tumbled 5.8 per cent or 10 cents to $1.63 last Friday after posting a 28.8 per cent drop in net profit to $39.6 million for the first quarter.

CIMB maintained a "buy" call on the stock in a report. It expects SembMarine's share price to still be under pressure in the short term, given the weak results, but added that catalysts include the sale of deferred rigs and higher order wins.

Meanwhile, telco M1 was in play following reports that said some parties have expressed interest in buying the company. The counter was flat at $2.17 last Friday after jumping 3.8 per cent or eight cents the day before.

A report from Bloomberg, citing unnamed sources, said Shanxi Meijin Energy Co and China Broadband Capital are among the bidders for the $1.9 billion Singapore wireless carrier, while Bahrain Telecommunications Co and private equity funds have also made non-binding bids.

DBS Equity Research upgraded its call on M1 stock to "buy", noting that share-price sentiment could be supported by the potential sale of stakes in M1 by its major shareholders, which would then trigger a general offer for minority shareholders.

Other companies due to report earnings this week include StarHub and Sembcorp Industries, both on Wednesday.

A version of this article appeared in the print edition of The Straits Times on May 01, 2017, with the headline 'Bourses' focus to be on US monetary policy, job data'. Print Edition | Subscribe