Markets Insights

Bourse keeps eye on oil prices, French election and Q1 results

Traders will be scrutinising OCBC's performance. Stellar first-quarter results by its banking rivals, DBS and UOB, helped drive up the STI by 1.7 per cent last week.
Traders will be scrutinising OCBC's performance. Stellar first-quarter results by its banking rivals, DBS and UOB, helped drive up the STI by 1.7 per cent last week.ST FILE PHOTO

A short but packed trading week is ahead for Singapore, with markets in Asia the first this morning to react to results of the final round of the French presidential election, which took place yesterday.

Singapore will be closed for trading on Wednesday, Vesak Day.

Investors are also eyeing a slew of first-quarter results this week from local blue-chip companies as the earnings season gets under way, starting with OCBC Bank tomorrow.

The last of the three local banks to report, the pressure will be on OCBC to deliver numbers as good as those of its two rivals, DBS Group and United Overseas Bank.

The stellar numbers reported by DBS and UOB helped fuel a 1.7 per cent gain in the Straits Times Index (STI) for the week, to 3,229.73.

A positive lead for the market could come from Wall Street, which rose on Friday after April's non-farm payrolls report topped expectations, showing that the United States economy added 211,000 jobs last month.

Investors are also eyeing a slew of first-quarter results this week from local blue-chip companies as the earnings season gets under way, starting with OCBC Bank tomorrow.

The last of the three local banks to report, the pressure will be on OCBC to deliver numbers as good as those of its two rivals, DBS Group and United Overseas Bank.

That comes after slow hiring over the first three months of the year and sluggish economic growth.

The Dow Jones Industrial Average cheered the data with a 0.3 per cent gain, while the Nasdaq climbed 0.4 per cent.

But the key focus at the start of the week will be the final outcome of the French election, where a shock result could carry major implications.

Before the week began, the market had bet that pro-European Union centrist candidate Emmanuel Macron would beat back anti-EU, far-right candidate Marine Le Pen.

IG Asia market strategist Pan Jingyi said that this confidence was based on opinion polls that gave Mr Macron a margin of about 20 per cent against Ms Le Pen.

"The reverse could significantly dent market confidence," she said.

Investors are also watching oil prices, which dipped below US$44 (S$61) a barrel last week, near its lowest point since the Organisation of Petroleum Exporting Countries (Opec) agreement to cut output in November last year.

Ms Pan attributed the slide to growing disillusionment with the extent to which the output curb by Opec can rein in supply.

Meanwhile, market observers say the sustainability of the STI's rally above 3,200 will depend on the first-quarter performance of key constituents this week.

CMC Markets analyst Margaret Yang said: "If their earnings are good, the momentum can keep going. The first quarter this year could be better than that last year because we have seen a broad recovery in global trade and manufacturing."

After OCBC, Wilmar International will report its results on Thursday. Friday will see first-quarter results from ComfortDelGro Corp, Genting Singapore, UOL Group and Singapore Technologies Engineering as well as full-year results from SIA Engineering.

Also of interest are first-quarter results from oil and gas firms Ezion Holdings and KrisEnergy on Friday.

Casino operator Genting Singapore is expected to post results that mirror a rebound in Macau's gaming revenues.

Maybank Kim Eng maintained a buy call on the gaming counter, citing higher VIP volume and lower VIP rebate rates.

RWS, which has more Malaysian mass-market gamblers than Marina Bay Sands due to its Genting heritage, has been ceding mass-market share since the first quarter of 2013 due to the ringgit's weakness.

But if the ringgit continues to recover against the Singdollar in the second quarter, RWS could regain market share, the broker said.

A version of this article appeared in the print edition of The Straits Times on May 08, 2017, with the headline 'Bourse keeps eye on oil prices, French election and Q1 results'. Print Edition | Subscribe