Markets Insights

Stocks expected to extend gains; key data releases in spotlight

China will release March consumer price index and price producer inflation figures on Thursday.
China will release March consumer price index and price producer inflation figures on Thursday.PHOTO: REUTERS

The benchmark Straits Times Index (STI) may see an extension of last week's rally this week, bolstered by gains on Wall Street on the back of a stronger-than-expected March jobs report, and hopes for a rapid conclusion to US-China trade talks.

The Dow Jones Industrial Average finished at 26,424.99, up 0.2 per cent. The broad-based S&P 500 advanced 0.5 per cent to 2,892.74, while the tech-rich Nasdaq Composite Index gained 0.6 per cent to 7,938.69. The three indices are at their 2019 peaks.

SPI Asset Management head of trading and market strategy Stephen Innes said: "There remains uncertainty over US-China trade negotiations, but given the trade dispute is the strongest headwind global markets have faced over the past 12 months, I think local equity markets will catch a significant updraft when the deal is finally tabled."

The promise of a trade deal saw the STI enjoy its best weeks last week, climbing 3.4 per cent above the previous week.

This week, investors are likely to look to the US Federal Reserve's release of the minutes from its March meeting for further clues on interest rates, IG market strategist Pan Jingyi said.

The release of the US consumer price index on Wednesday and the producer price inflation on Thursday will also be closely monitored since wage gains were muted in the March jobs report last Friday, and most analysts see no sign of inflation on the horizon.

ANTICIPATION

There remains uncertainty over US-China trade negotiations, but given the trade dispute is the strongest headwind global markets have faced over the past 12 months, I think local equity markets will catch a significant updraft when the deal is finally tabled.

MR STEPHEN INNES, SPI Asset Management's head of trading and market strategy.

In the United States, attention will also shift to the corporate earnings season, with major banks due to report from Friday onwards.

On the local front, the Monetary Authority of Singapore (MAS) will be releasing its semi-annual policy statement alongside the advance estimate of Singapore's first-quarter gross domestic product on Friday.

According to the market consensus, Singapore's first-quarter GDP could slow to 1.5 per cent on a year-on-year basis.

Since February's core inflation reading was at 1.5 per cent year on year, down from January's 1.7 per cent, most economists have reckoned the lower-than-expected figure "cements the case for a pause at the upcoming MAS April review", and that there is no pressing need for the MAS to further tighten policy at this stage.

With Brent crude oil prices climbing almost to US$70 per barrel last week, KGI Securities' Mr Joel Ng is recommending investors shift into value plays in the energy sector, where he believes downside risks are mitigated by their valuations.

Value plays include Sembcorp Marine, which the brokerage has a "buy" recommendation and a target price of $2.48, a 46.7 per cent upside on the counter's closing price of $1.69 last Friday.

Over the weekend, RHT Health Trust Manager, the trustee-manager of RHT Health Trust (RHT), said Fortis Healthcare International, a controlling unit holder of RHT, and Stellant Capital Advisory Services, the sole shareholder of the trustee-manager, have each started discussions with various parties to explore the possibility of a sale of their interests in RHT and the trustee-manager.

Elsewhere in Asia, China will release March consumer price index and price producer inflation figures on Thursday, while the Philippines will release February trade data also on Thursday.

In Europe, the emergency European Union summit and European Central Bank's monetary policy decision will take place on Wednesday.

United Overseas Bank said in its weekly outlook: "Theresa May will head to the summit with no real plan on how to proceed (with Brexit) and we think another delay to Brexit looks to be the most likely scenario for now."

A version of this article appeared in the print edition of The Straits Times on April 08, 2019, with the headline 'Stocks expected to extend gains; key data releases in spotlight'. Print Edition | Subscribe