3 Market News to start your trading week – 05/06/17 June 5, 2017

This trading week may prove to be exciting to many due to various events which happened over the weekend and also the upcoming events this week. The following news may have the most impact to the global and regional markets.

1) US Job Reports failed to Match Expectations

The US economy added 138,000 jobs in May, which is well below the forecasts of 185,000 new jobs. However according to the US Labour Department on Friday, the employment rate still fell to a 16 year low of 4.3%. This soft headline on job numbers failed to derail expectations of the Federal Reserves implementing a second rate hike on 14th June during the FOMC meeting. In fact, based on CME FedWatch, there is a 94.6% probability of raising rates by 25 basis points.

With the US economy showing signs of faster than expected growth, investors may like to monitor the FOMC minutes after it is out, to look for signs if there may be an unexpected fourth rate hike this year. Should the fourth rate hike happen, banking related counters may benefit from it.

2) President Trump have just withdrawn from the Paris accord

After the announcement that the US is pulling out of the Paris Climate Agreement last week, crude oil prices took a hit, falling more than 1% on Friday, posting a second straight week of losses. This is due to worries that President Trump’s decision to abandon a climate pact could spark more crude oil drilling in the US, worsening a global glut.

Moreover, with U.S. drillers adding 11 rigs last week, in a record stretch of 20 straight weeks of additions, and President Trump’s bid to sell half of US oil reserves, it can be seen that the America First Energy initiative in which President Trump emphasized during his campaign may come true. Even with OPEC extending production cuts by 9 months, this move by the US may likely impede further upside on crude. If oil prices continue to fall due to oversupply, local offshore and marine counter may be impacted negatively. Should investors still want to invest in oil related counters, they may want to look at those with diversification.

US exit from the Paris accord also made good President Trump’s campaign promise, and his intention to bring coal mining back to the US. However it may take quite some time to raise the percentage of America’s power which is generated by coal. This is because, natural gas and renewables are relatively cheap at the moment, and they are used to power-up US power plants at the moment. Hence, should coal be used to generate more American power, these existing power plants have to either be converted to coal power plants, or more coal power plants have to be built.

3) Terrorist Attacks seem to be on the rise

Over the weekends, yet another terrorist attack occurred; this time in London. In fact over the past few weeks, there have been numerous terror attacks, with some happening in ASEAN, which is close to Singapore.

Last week, the Ministry of Home Affairs’ terror report highlighted that Singapore is under the highest terror threat in recent years. During the 2017 Budget, it was announced that our defence budget (both the Minister of Home Affairs and Ministry of Defence) would have a 2% increase over 2 years.

Hence this may indicate the importance of defence and military strength during such times, and should terror attacks continue, countries will most likely heighten their security and defence spending. When that happens, companies which are into technology related to defence, or companies which are producing weapons may benefit.

Should you want to know more information on the markets or what to look out for, you can speak to a Dealer at a Phillip Investor Centre near you.

Disclaimer

These commentaries are intended for general circulation. It does not have regard to the specific investment objectives, financial situation and particular needs of any person who may receive this document. Accordingly, no warranty whatsoever is given and no liability whatsoever is accepted for any loss arising whether directly or indirectly as a result of any person acting based on this information. Opinions expressed in these commentaries are subject tIceberg Research strikes again with another Short Report o change without notice. Investments are subject to investment risks including the possible loss of the principal amount invested. The value of the units and the income from them may fall as well as rise. Past performance figures as well as any projection or forecast used in these commentaries are not necessarily indicative of future or likely performance. Phillip Securities Pte Ltd (PSPL), its directors, connected persons or employees may from time to time have an interest in the financial instruments mentioned in these commentaries. Investors may wish to seek advice from a financial adviser before investing. In the event that investors choose not to seek advice from a financial adviser, they should consider whether the investment is suitable for them.

The information contained in these commentaries has been obtained from public sources which PSPL has no reason to believe are unreliable and any analysis, forecasts, projections, expectations and opinions (collectively the “Research”) contained in these commentaries are based on such information and are expressions of belief only. PSPL has not verified this information and no representation or warranty, express or implied, is made that such information or Research is accurate, complete or verified or should be relied upon as such. Any such information or Research contained in these commentaries are subject to change, and PSPL shall not have any responsibility to maintain the information or Research made available or to supply any corrections, updates or releases in connection therewith. In no event will PSPL be liable for any special, indirect, incidental or consequential damages which may be incurred from the use of the information or Research made available, even if it has been advised of the possibility of such damages. The companies and their employees mentioned in these commentaries cannot be held liable for any errors, inaccuracies and/or omissions howsoever caused. Any opinion or advice herein is made on a general basis and is subject to change without notice. The information provided in these commentaries may contain optimistic statements regarding future events or future financial performance of countries, markets or companies. You must make your own financial assessment of the relevance, accuracy and adequacy of the information provided in these commentaries.

Views and any strategies described in these commentaries may not be suitable for all investors. Opinions expressed herein may differ from the opinions expressed by other units of PSPL or its connected persons and associates. Any reference to or discussion of investment products or commodities in these commentaries is purely for illustrative purposes only and must not be construed as a recommendation, an offer or solicitation for the subscription, purchase or sale of the investment products or commodities mentioned.

About the author

Mr Siew Wei En Samuel
Equity Dealer

Mr Siew Wei En Samuel - Equity Dealer, POEMS Dealing (Toa Payoh), Phillip Securities Pte Ltd

Mr. Samuel Siew currently provides dealing services to over 10,000 trading accounts and is part of the POEMS Dealing, the core in-house dealing department of Phillip Securities Pte Ltd. Apart from his Dealing role, he also gives training seminars to further enrich his clients’ financial knowledge.

Samuel often conducts Market Outlook/ Educational/ Product seminars monthly for clients and Tertiary Institutions in both English and Chinese. He believes in value investing, and focuses on stocks with good company fundamentals, as well as dividend paying stocks. Samuel regularly provides market commentary for Lianhe Zaobao, Capital 95.8FM and 938 Live FM.

Samuel holds a Bachelor of Degree of Commerce with a Double Major in Marketing & Finance from Curtin University.

No Related Market Journal.