Markets Insights

All eyes on French election outcome, Trump's tax plan

Sizing up the candidates running in the French presidential election, in Saint Andre de La Roche, near Nice.
Sizing up the candidates running in the French presidential election, in Saint Andre de La Roche, near Nice.PHOTO: REUTERS

Singapore investors also waiting for Q1 results for hints on current business climate

Markets across the globe are starting the week with a close eye on the outcome of the first round of France's presidential elections.

Another source of keen interest is whether US President Donald Trump will make a tax reform announcement this week.

On the domestic front, Singapore investors await first-quarter results from CapitaLand on Wednesday, Sembcorp Marine on Thursday and United Overseas Bank earnings on Friday for hints on the current business climate.

The Straits Times Index ended 0.06 per cent higher on Friday but shed 0.93 per cent over the week.

Market sentiment was cautious ahead of the French election results, which could either assuage concerns over geopolitical tensions or add more fuel to the fire.

Not helping are lower oil prices and a weaker Wall Street lead on Friday after the Dow Jones Industrial Average closed 0.15 per cent lower.

UNCERTAIN TIMES

The French presidential election, which takes place in two stages with the first round on April 23 and May 7, is among the most uncertain in recent years and holds important implications for financial markets.

MR JAMES CHEO, Bank of Singapore investment strategist.

"The French presidential election, which takes place in two stages with the first round on April 23 and May 7, is among the most uncertain in recent years and holds important implications for financial markets," said Mr James Cheo, investment strategist at Bank of Singapore.

The rise of extreme "anti-system" candidates - far-right leader Marine Le Pen and far-left candidate Jean-Luc Melenchon - has added to concerns about mounting populism in Europe in the wake of Britain's decision to leave the European Union.

"The victory of either of these candidates will cast doubt over the future relationship between France and the EU," CMC Markets analyst Margaret Yang said.

Meanwhile, markets are also watching for what Mr Trump promised on Friday to be a "big announcement on Wednesday" of a "massive" tax cut for Americans, as part of plans to overhaul the nation's tax code. This comes as he approaches the end of his first 100 days in office this Saturday.

In Singapore, investors are keeping a close eye on banking stocks. After UOB, DBS Group Holding will post its results on May 2, and OCBC Group on May 9. UOB will trade ex-dividend on Wednesday, DBS on May 4 and OCBC on May 22.

Bank stocks have played a significant part in the local market's strong outing in the first quarter. So far this year, UOB has jumped about 6 per cent, OCBC 7 per cent and DBS has surged 9 per cent, KGI Securities trading strategist Nicholas Teo said.

Of interest to investors too is how Sembcorp Marine will perform for the first quarter, after Keppel Corp last Thursday posted its first year-on-year rise in quarterly profits since early 2015.

The conglomerate posted a net profit of $260.4 million for the three months to March 31, up 23.7 per cent on the $210.6 million from the same quarter a year earlier. A stronger performance across its infrastructure and investments divisions helped boost earnings, even as the offshore and marine business remained weak.

Keppel closed 0.2 per cent or one cent higher at $6.56 on Friday, while SembMarine closed 0.3 per cent or 0.5 cent higher at $1.72.

A version of this article appeared in the print edition of The Straits Times on April 24, 2017, with the headline 'All eyes on French election outcome, Trump's tax plan'. Print Edition | Subscribe