May 04, 2015

    US jobs data to take centre stage this week

    MARKET sentiments may be in for another bumpy ride in the days ahead, although local traders will probably take heart from the solid performance on Wall Street on Friday.

    Generally, investors will be looking out for a key set of data from the United States to seek clarity on macroeconomic and interest-rate outlook.

    This week, the US will release figures on how its trade and manufacturing performed last month. But all eyes will be on the non-farm payrolls data due on Friday, with economists surveyed by The Wall Street Journal estimating an increase of 220,000 jobs last month.

    The estimate is significantly above the 126,000 jobs reported for March, but with the US economy growing just 0.2 per cent in the first quarter according to official data last week, the US recovery has yet to gain a firm footing. That means investors will continue to stay on the sidelines this week as they look for guidance, said CMC Markets analyst Nicholas Teo.

    "It's really hard to say which way the US job data could go, after the recent slew of mixed data. If the job data is strong, there may be renewed worries of the Federal Reserve raising the interest rate sooner than expected; if it's weak, the market may actually breathe a sigh of relief."

    Reflecting the persistent uncertainties, US equities went through a choppy patch last week, with the Dow Jones Industrial Average sliding for four straight days before value-hunting on Friday lifted the index. For the week, the Dow fell 0.3 per cent.

    At home, the benchmark Straits Times Index (STI) followed a similar pattern, closing 25.61 points or 0.73 per cent down for the week to 3,487.39.

    Remisier Alvin Yong agreed that the local market will be dominated by a wait-and-see attitude, with the STI likely to stay range-bound between 3,450 and 3,500 this week.

    "Under the current market conditions, it's hard to expect STI recapturing its previous highs above the 3,500 level, barring movements caused by corporate earnings this week," Mr Yong said.

    Companies that will announce their quarterly results this week include Tigerair and Osim tomorrow, as well as Noble Group and Sembcorp Industries on Thursday.

    The latest results of Noble will be closely watched by investors and shareholders since reporting a US$240 million (S$320 million) fourth-quarter loss in February, amid a series of disparaging reports against the commodities firm by Iceberg Research.

    In recent weeks, Noble share prices have held at around 85 cents, suggesting resilience at the current level, DBS Vickers said in a report last month. Last week, Noble shares closed 3 per cent higher at 86.5 cents.

    Outside the STI, S-chip plays have stood out in recent weeks and may continue to be a highlight as the bull market in China shows no sign of stopping, both Mr Teo and Mr Yong noted.

    The CSI300 Index - which tracks the largest listed companies in Shanghai and Shenzhen - gained a whopping 17.3 per cent, due partly to recent monetary easing and expectations of further stimulus to boost China's slowing economy.

    Against that backdrop, the FTSE ST China Top Index, which comprises the 20 largest Chinese companies listed here, gained 9.21 per cent last month to 213.86 and touched a 52-week high of 216.34 on April 27.