S'pore bourse rides on hopes of China rebound
THE Singapore market will this week pin hopes on a strong rebound of China stocks and less volatility in the global bond market, if it is to have a chance to swing upwards, dealers say.
But at home, a list of big companies will report their financial results this week, thus refocusing some investor interest on local corporate earnings.
ComfortDel Gro will report its earnings on Wednesday, followed by Singapore Airlines, Singtel and Genting on Thursday, and Starhub on Friday, according to the economic calendar of the Singapore Exchange.
"There are only a few more Straits Times Index (STI) companies that need to report results before we are done and dusted for this quarter," said financial website Motley Fool yesterday.
As for the bigger picture, steep falls in Chinese stocks and a sell-off in global bonds last week pressured the market, with the STI closing in positive territory for only one day - on Friday - on low volume.
The STI ended the week at 3,452.01, down 35.38 points or 1.01 per cent for the week.
There are hopes of a strong Chinese rebound this week, after China stocks had their worst three-day run in nearly two years from Tuesday to Thursday.
A possible positive move for markets was the announcement yesterday by China's central bank to cut its benchmark lending rate by 25 basis points to 5.1 per cent, its third reduction since November, as the world's second-biggest economy has been cooling.
Its recent rate cuts received ebullient cheers from the market.
Singapore players had taken direction from the recent surge of Chinese and North Asian markets amid the mixed local corporate reporting season.
Adding to last week's poor showing were lingering questions on when the United States, the world's biggest economy, would hike its super-low interest rates.
Friday's US employment data has generated firmer views that the Federal Reserve should tighten rates only in September or even later.
The US data showed a 223,000 net increase in last month's employment, compared to a March gain that was the smallest since June 2012. The jobless rate fell to 5.4 per cent, the lowest since May 2008.
"The 39,000 downward revision to the gains in payrolls in February and March took the gloss off the rebound in April. And average hourly earnings increased by only 0.1 per cent month on month in April," said Paul Ashworth, chief US economist at Capital Economics, in a note.
"We think any lingering possibility of a June rate hike from the Fed is now off the table, with September probably the most likely lift-off date," he said.
The global bond volatility last week might continue this week, investors told Bloomberg, with an eye on upcoming US data.
This week, the US will release the Fed's index of labour market conditions, and data on retail sales and industrial production.
Despite the current pullback, the STI kept its uptrend, said Phillip Capital on Friday.
It said that "as long as the key support at 3,350 holds, we (retain) a positive outlook for the index and target 3,550 and 3,600 on the upside".