Markets Insights

S'pore market likely to take cue from Wall St

A factory in China. The country is set to release this week key economic data for April, including the Caixin services PMI, trade figures and inflation rate.
A factory in China. The country is set to release this week key economic data for April, including the Caixin services PMI, trade figures and inflation rate.PHOTO: AGENCE FRANCE-PRESSE

Positive US job data bodes well for American economy; on local front, six STI counters due to report earnings

The benchmark Straits Times Index (STI) this week is likely to take its cue from Wall Street after better-than-expected April job figures left investors upbeat about the US economic outlook and interest rate environment.

SPI Asset Management's head of trading and market strategy Stephen Innes said the job report suggested the "US economic engine continues to fire on all cylinders, with inflation remaining mute".

Last Friday, the Dow Jones Industrial Average rose 0.75 per cent to 26,504.95, the S&P 500 gained 0.96 per cent to 2,945.64, and the Nasdaq Composite Index added 1.58 per cent to 8,164.

"Following the bullish close in New York, I think we could see some positive knock-on effects in Asia and the local market as equity bears are falling by the wayside," Mr Innes added.

With the majority of companies on Wall Street posting earnings for the March quarter, global attention will pivot towards geopolitics this week, with the next round of US-China trade talks in Washington taking place on Wednesday.

Market watchers have said trade negotiations will continue to weigh on market sentiment, following a CNBC report that a trade deal could be announced by Friday.

On the local front, a quiet week awaits, with just today's Nikkei survey of April purchasing managers' index (PMI) figures, and Friday's retail sales figures for March expected.

FXTM market analyst Han Tan said of the survey: "A steeper expansion for the industry should point to Singapore's resilience in weathering external headwinds, and may translate into gains for the Singapore dollar. However, the currency's upside for the week may be limited, should the March retail sales data due on Friday unveil yet another month of contraction, having posted year-on-year declines in three of the four months prior."

The earnings season continues, with six STI components due to announce their first-quarter earnings on Friday. They include OCBC Bank, the last of the trio of local banks to report.

Results from property players City Developments and UOL Group are also due on Friday. And Wilmar International, Genting Singapore and ST Engineering are also set to report their results.

Over the weekend, Best World International announced it will release earnings for the three months ended March 31 on Wednesday, and has been granted a further extension of a trading halt, to be lifted before market opens on Thursday.

Trading in the skincare product maker and distributor was halted on April 24, after the stock fell 9 per cent, following a report by short-seller Bonitas Research questioning the accounting behind the company's profits and its sales practices in China.

Elsewhere in Asia, there are key economic data releases for April in China. These include the Caixin services PMI today, trade data on Wednesday, and inflation rate on Thursday.

Also, Indonesia will release first-quarter gross domestic product (GDP) data today, and Australia, its April trade figures tomorrow. Meanwhile, Japan, which returns to trading tomorrow after a 10-day-long break, will post first-quarter GDP data on Friday.

A version of this article appeared in the print edition of The Straits Times on May 06, 2019, with the headline 'S'pore market likely to take cue from Wall St'. Print Edition | Subscribe