S'pore bourse may skip Monday blues
THE Singapore market has several positives going for it at the start of the week, from strong China shares to a record close on the Nasdaq last Friday, and expected shiny earnings from the three Singapore banks.
Still, it might pay to keep an eye out for ongoing worries about Greece's debts and the release of United States economic data on Wednesday. The Singapore market will be closed on Friday for May Day.
Led by China, the surge in North Asian shares on liquidity play in the past few weeks has been casting a bullish glow on Singapore and providing fuel to the shares of Chinese companies traded in Singapore and penny stocks.
The Straits Times Index ended on Friday at 3,513 points, down 0.35 per cent for the week.
In the US on Friday, the jump in tech stocks - led by behemoths Google, Amazon and Microsoft - helped push the Nasdaq index to a second consecutive record close.
For the week, the Nasdaq Composite rose 3.3 per cent, while the S&P 500 gained 1.8 per cent and the Dow Jones 1.4 per cent.
The strong US dollar had raised some concern that earnings at US companies would be negatively affected, but this has largely not been borne out so far.
"US corporate earnings will be key to the markets," said CMC Markets analyst Nicholas Teo. "There has also been a bit of fire on China shares."
Economic watchers are keenly awaiting the release of the US first-quarter gross domestic product data on Wednesday. The American economy, the world's biggest, probably expanded at a slower annualised rate in the first quarter, after growing 2.2 per cent in the final quarter last year, economists say.
Also happening on Wednesday is the second day of the US central bank's Federal Open Market Committee meeting. Policymakers said in their last statement on March 18 that a rate increase at this meeting "remains unlikely".
Capital Economics' chief US economist Paul Ashworth wrote in a note that the Federal Reserve is still likely to do so later this year.
"A September lift-off is the marginal favourite, but June and July are possibilities if it becomes apparent quite quickly that the earlier weakness in the incoming data was a temporary weather-related blip rather than something more serious."
The three Singapore banks are slated to release their quarterly earnings this week, amid analyst reports that an environment of higher local interest rates in the coming months would not much hurt their net interest margins.
DBS is to release its results today, with OCBC and UOB doing so on Thursday.
In its recent earnings review, Nomura said it expects the three banks to "demonstrate modest growth in core earnings, stable net interest margins and relatively healthy asset quality". It expects DBS to report above-consensus earnings for the quarter.
Completing the flurry of news is another debt hump faced by Greece.
Greece risks running out of cash within weeks, and it needs to pay the International Monetary Fund almost 1 billion euros (S$1.45 billion) next month.
At a tension-filled meeting of euro-zone finance ministers on Friday, Greece was sharply criticised for dragging its feet on the preparation of reforms that would unlock funding from international lenders, Reuters reported.
German Finance Minister Wolfgang Schaeuble hinted on Saturday that Berlin was preparing for a possible Greek default.