Markets Insights

Wall St rally expected to lift regional shares

A trader working ahead of the closing bell on the floor of the New York Stock Exchange last month. Even though the US earnings season has kicked into gear, traders will also be listening in on developments from the US and Japan trade talks today and
A trader working ahead of the closing bell on the floor of the New York Stock Exchange last month. Even though the US earnings season has kicked into gear, traders will also be listening in on developments from the US and Japan trade talks today and tomorrow.PHOTO: AGENCE FRANCE-PRESSE
Wall Street ended slightly lower on Monday, dragged down by financials. As Fred Katayama reports, underwhelming earnings from Goldman Sachs and Citigroup curbed investor enthusiasm.

Local construction shares could see interest after sector's positive GDP advance estimates

After a week of range-bound trading, the benchmark Straits Times Index is likely to start the trading week (a shorter week because of Good Friday) on higher ground - taking cues from last Friday's Wall Street rally.

The Dow Jones Industrial Average closed 1 per cent up at 26,412.30 last Friday. The broad-based S&P 500 advanced 0.7 per cent to 2,907.41, its first close above 2,900 in more than six months, while the tech-heavy Nasdaq Composite Index climbed 0.5 per cent to 7,984.16.

On the performance of the New York Stock Exchange, SPI Asset Management head of trading and market strategy Stephen Innes said that it was such an encouraging performance in the US equity market that it is hard for investors not to be enthusiastic.

"Spring has sprung, 'green shoots' abound and dovish central bank bias is buttressing investor sentiment," he remarked.

Even though the US earnings season has kicked into gear, investors will also be listening in on developments from the US and Japan trade talks today and tomorrow.

Buoyed by the rally in the US market, Mr Innes expects trading in Singapore and the rest of Asia to open today with a "very positive vibe".

With companies in Singapore also due to report their first quarter performance in the coming weeks, Mr Marcus Toh, principal trading representative at Phillip Securities, said investors are likely to shift to profit-taking mode as many companies have rallied this year.

There could also be growing interest in construction counters after last Friday's first-quarter GDP advance estimates showed the sector expanded 1.4 per cent, following 10 consecutive quarters of decline, said a remisier.

Singapore Exchange market strategist Geoff Howie explained that the construction sector's performance was "somewhat in pace with the five biggest Singapore-focused construction stocks".

"Chip Eng Seng, KSH Holdings, Boustead Projects, Lian Beng Group and Wee Hur Holdings have averaged 14 per cent total returns in the 2019 year thus far," he noted.

While not loaded, the local economic docket has a key release on Wednesday with March non-oil domestic export data due. A Bloomberg poll suggests exports will fall 5 per cent month on month and 1.9 per cent year on year after a strong showing in February.

Among economies in Asia, a slew of key data releases will be out in China. Among them are the industrial production data for March and also first-quarter GDP figures.

Of the Chinese data releases, FXTM research analyst Lukman Otunuga said: "While last month's PMI data showed signs that the world's second-largest economy is stabilising, more data points adding to that narrative could soothe concerns over the Chinese economy and potentially boost risk-on sentiment as well."

The Bank of Korea has a monetary policy decision to make, with a Bloomberg poll of economists showing the policy rate is likely to stay unchanged at 1.75 per cent.

In South-east Asia, much focus will be on the general and presidential elections in Indonesia, which take place on Wednesday.

A version of this article appeared in the print edition of The Straits Times on April 15, 2019, with the headline 'Wall St rally expected to lift regional shares'. Print Edition | Subscribe