3 Market News to start your trading week – 27/03/17 March 27, 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 3 pieces of news may have the most impact to the global and regional markets.

1) Trump’s healthcare bill failed to pass through Congress

With the collapse of his healthcare bill last Friday, it showed some signal that President Donald Trump is starting to suffer certain political setbacks. This is in spite of the Congress being controlled by his own party members, the Republicans. This incident casted doubts on his other potential policies which he promised to implement, such as those on tax reduction.

Due to this uncertainty, the market reacted negatively as the ‘Trump Trade’ deflates. This morning, the Dow futures fell approximately 150 points to a six week low, Asian markets such as Shanghai Composite index, SSE, and Japan’s Nikkei 225 saw decreases too.

Growing doubts on President Donald Trump’s pro-growth economic agenda, also prompted investors to dump risky assets and rush to safe havens, causing gold prices to rally to a four-week high today.

Investors ought to keep a keen eye on this, as this could be a spark to something bigger. With much anticipation to Trump’s potential reforms on tax, any disruption to it might cause hysteria on certain segments of the market. This is especially the concern as markets have rose significantly since Trump won the election last November.

2) OPEC, non-OPEC to look at extending oil-output cut by six months

Yesterday, a joint committee of ministers from OPEC and non-OPEC oil producers agreed to review in April on whether a global pact to limit supplies should be extended by six months, which have rekindled hope that oil supply may remain supressed.

Thus, though oil prices started the week lower today, it did not break the weakest levels since November 2016 raising hopes that oil price might remain stable in the short term.

Going forward, the decision in April would be crucial in the oil supply for the rest of the year. However, a wildcard still remain. The uncertainty around US oil supply and Trump’s America First Energy initiative might have a significant impact to the oil and gas industry. Should oil supply remain supressed, oil prices may remain stable or show positive signals, which would be positive for the supressed offshore and marine sector.

3) Theresa May has finally revealed that she will trigger Article 50 on March 29

Should Article 50 be triggered by the UK, Britain’s complex negotiations to exit the EU will finally be able to take place. However, the road ahead would be unclear, as no state has left the EU before, and the rules for exit as stated in Article 50 of the Treaty of Lisbon are brief.

Though in theory it will start a 2 year of talks for separation, analysts expects that the process may take longer and that the time scale might be extended.

With that in mind, much uncertainty could be expected especially with regards to trade deals, and whether the divorce would be peaceful, or a “hard Brexit” may occur. Investors can take a cautious approach even though it is expected that there may not be any drastic impacts in the near term, as most of the anticipated changes might have been priced-in.

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.

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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.

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