Markets Insights

Slew of economic data worth watching

Strong rallies on Wall Street following a robust jobs report in the United States last Friday are likely to boost sentiment in Asia.

The Dow Jones Industrial Average rose 440.53 points to close at 25,335.74, while the Nasdaq 100 - made up of the 100 largest companies in the Nasdaq composite - also reached a record high.

The US economy added 313,000 jobs last month, much higher than consensus estimates of a gain of 205,000 jobs. Wages, meanwhile, grew less than expected, rising 2.6 per cent on an annualised basis.

BNY Mellon senior global market strategist Marvin Loh says the US report is very positive for an economy often thought to be in the late stages of a recovery. More importantly, the additional jobs were created without any acceleration in wages.

"While the nuances of the report will likely be debated among the Federal Open Market Committee (FOMC) when they next meet on March 20 and 21, we don't think it changes their short-term trajectory for rate hikes. At this point there are near full odds of a rate hike in March, and strong confidence that there will be at least three hikes throughout the year."

IG market strategist Jingyi Pan expects the market will focus on economic indicators in the coming week, particularly US inflation data. Other closely watched data releases due in the US include retail sales, industrial production and housing starts. The US Treasury will also be auctioning some 10-year notes and 30-year bonds amid the FOMC's blackout period.

Mr Mark Tinker, head of AXA IM Framlington Equities Asia, believes bond yields look to be on an uptrend as quantitative easing - basically, an expansionary monetary policy - unwinds and a degree of normalisation returns to interest rates. Equity markets are still trending up, supported by growing cash flow.

The new week also brings a slew of indicators to watch in the Asian region. China's data sits in the spotlight, with its February retail sales, industrial production and fixed asset investments out on Wednesday.

"Amid the rather mixed set of numbers we have seen thus far, the market is not holding strong expectations, with industrial production expected to moderate to 6.2 per cent year-on-year for the collective first two months of the year," says Ms Pan.

Other potentially market-moving releases include Japan's machine orders on Wednesday and, in Singapore, January retail sales data today, the manpower survey tomorrow, and February non-oil domestic exports on Friday.

Asian markets could benefit from the newly inked Comprehensive and Progressive Agreement for Trans-Pacific Partnership (CPTPP), which replaced the previous TPP after the US pulled out. While the gains from the new deal will be smaller without the US, Moody's says it "will still boost exports and incomes for all members and help to sustain reform efforts in a number of countries, a credit positive".

The credit agency adds that Malaysia will see a change of just over 3 per cent in real income under the CPTPP from its 2030 baseline, the highest out of all 11 member nations. Second-highest is Singapore, with less than 2 per cent change in real income.

In local news, THSC Investments plans to make a voluntary conditional cash offer of 50 cents for each of mainboard-listed Tat Hong Holdings' shares. The offer represents a 2 per cent premium over the crane operator's last-traded price of 49 cents a share.

Keppel Fels has secured a contract from Awilco to construct a mid-water semi-submersible drilling rig for harsh environment use, worth about US$425 million (S$560 million).

A version of this article appeared in the print edition of The Straits Times on March 12, 2018, with the headline 'Slew of economic data worth watching'. Print Edition | Subscribe