Markets Insight

More ups than downs expected this week

Among the highlights last week was Singapore Exchange's announcement that it is in exclusive talks to buy London's Baltic Exchange.
Among the highlights last week was Singapore Exchange's announcement that it is in exclusive talks to buy London's Baltic Exchange.PHOTO: REUTERS

Analysts see market sentiment improving, with Singapore and HK rebounding from recent lows

Singapore shares could see more positive news in the coming week as the market's momentum continues to gather pace, say analysts.

"There is more upside potential than downside for now," CMC Markets Singapore market analyst Margaret Yang told The Straits Times.

"If you look at Hong Kong and Singapore, both have rebounded from their recent lows... The market sentiment has also improved as we see crude oil challenging US$50 a barrel, so the commodities and resources sector has been doing quite well," she noted, referring to the recent recovery in crude oil prices.

While she remains "quite cautious" on crude prices keeping above the US$50 level, she says the strong rally has been an encouraging sign for the global economy.

"It means it will be less stressful for a lot of companies this year, especially those in the offshore and marine sector. Even banks will stand to benefit because default rates are likely to drop," she said.

The Straits Times Index closed at 2,802.51 points last Friday, up 1.4 per cent for the week - its third straight week of gains.

One of the highlights last week was Singapore Exchange's announcement that it is in exclusive talks to buy London's Baltic Exchange. Market watchers have valued the potential sale to be about US$100 million (S$138 million).

On Wall Street, the Dow Jones Industrial Average climbed 0.25 per cent on Friday - after US Federal Reserve chair Janet Yellen implied that a higher interest rate could be rolled out soon.

Speaking at Harvard University, Dr Yellen said: "It's appropriate... for the Fed to gradually and cautiously increase our overnight interest rate over time and, probably in the coming months, such a move would be appropriate."

Meanwhile, investors appear to have been warming up to the idea of the upcoming rate hike.

"Investors are checking the pulse of the economy and the numbers that came out this (past) week indicate the economy can handle the stress of higher rates," Mr Jim Davis, regional investment manager for The Private Client Group of US Bank, told Bloomberg.

"It's been a good week with all sectors rising and the economy is on good footing. It's healthy," he said.

Traders are likely to keep a close watch on a slew of economic data and global meetings this week.

The Organisation of Petroleum Exporting Countries (Opec) is due to meet in Vienna on Thursday, and this is likely to weigh on oil prices, while the US non-farm payrolls report coming out on Friday could shed light on when the next rate hike will take place.

Closer to home, China will release manufacturing data and industrial figures on Wednesday, while Japan will unveil statistics on retail trade, factory output, capital spending and the jobless rate this week.

The US markets are closed today for the Memorial Day holiday.

A version of this article appeared in the print edition of The Straits Times on May 30, 2016, with the headline 'More ups than downs expected this week'. Print Edition | Subscribe