Daily Morning Note – 17 July 2019
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PHILLIP SUMMARY
U.S. stocks closed lower on Tuesday after President Donald Trump said an agreement with China on trade tariffs had “a long way to go,” in a briefing with reporters. The fade came a day after major equity indexes eked out a round of all-time closing highs and as Wall Street digested a fresh, bank-heavy round of earnings reports.
The Dow Jones Industrial Average fell 23.5 points to 27,335.6, a loss of 0.1%, the S&P 500 index dropped 0.3% to 3,004.0, shedding 10.3 points and the Nasdaq Composite index edged 0.4% low, or a 35.4 point drop, to 8,222.8.
President Donald Trump described progress toward a China and U.S. tariff pact as “a long way to go” to reporters. Trump made his comments during a cabinet meeting at the White House, with reporters in attendance.
Investors were also digesting a series of earnings reports from major banks JPMorgan Chase & Co, Goldman Sachs, and Wells Fargo & Co. painted a mixed picture of the banking industry, and the broader economy’s strength, following a report from Citigroup Inc. on Monday.
TECHNICAL PULSE
Exxon Mobil Corp
Recommended Action: Technical LONG
Exxon Mobil’s descent has met some resistance. The weekly chart shows that the stock is currently in a consolidation phase when the stock price rejects and close above the previous low in Aug 2015 during Dec 2018.
BREAKING NEWS
US retail sales increase solidly in boost to economy. Retail sales increased 0.4 per cent last month as households stepped up purchases of motor vehicles and a variety of other goods. Data for May was revised slightly down to show retail sales gaining 0.4 per cent, instead of rising 0.5 per cent as previously reported.Excluding automobiles, gasoline, building materials and food services, retail sales jumped 0.7 per cent last month after an upwardly revised 0.6 per cent increase in May. These so-called core retail sales, which correspond most closely with the consumer spending component of gross domestic product, were previously reported to have increased 0.4 per cent in May.
EU braces for no-deal Brexit or another delay under Boris Johnson. The three-year Brexit crisis could be about to deepen as Mr Johnson’s pledge to leave the EU “do or die” – with or without a deal – on Oct 31 sets Britain on a collision course with the bloc’s 27 other leaders and his own parliament.
Oil falls as Iran tensions seen easing. Oil prices turned lower on Tuesday, falling more than 3 per cent after US President Donald Trump said progress has been made with Iran, signaling tensions could ease in the Mideast. Brent crude futures fell US$2.13 a barrel, or 3.2 per cent, to settle at US$64.35. The international benchmark hit a session high of US$67.09 earlier in the day. West Texas Intermediate crude futures settled at US$57.62 a barrel, down US$1.96, or 3.3 per cent. The US benchmark hit a session high of US$60.06 early in the trading day.
Mixed earnings at large US banks as Fed rate cut looms. JPMORGAN Chase reported record quarterly profits on Tuesday behind strong consumer business, but shares were pressured by worries over expected Federal Reserve interest rate cuts on a day of mixed results by large banks.Wells Fargo also notched higher profits, while Goldman Sachs reported a dip in profits, but topped analyst expectations.
Discretionary portfolios finding favour with Bank of Singapore clients. BANK of Singapore is seeing a surge in interest from clients in discretionary portfolio management (DPM) – with a 40 per cent jump among its Singapore clients seeking out the service between 2016 and 2018.The assets managed under DPM by Bank of Singapore hit US$7.7 billion as at 2018, about 1.5 times that in 2016. The DPM assets represented 7.5 per cent of the bank’s overall assets as at end of December last year. This penetration rate is up from 6.7 per cent in 2016, data from the private banking arm of OCBC showed.As a comparison, private banks in Asia have discretionary portfolios that make up roughly between 5 and 10 per cent of all portfolios; in some independent Swiss private banks, the discretionary component is at least half.
Utico says Hyflux rescue deal may be worth up to S$535 million. On Tuesday, Utico said that the equity valuation of Hyflux is set at S$340 million and that the total deal value could be S$535 million, higher than an earlier failed deal of S$530 million that SM Investments (SMI) had proposed.
Source: SGX Masnet, The Business Times, Bloomberg, Channel NewsAsia, Reuters, PSR
Webinar Of The Week
Market Outlook: :(PSR) 2019-07-15 US weekly, China Weekly, Technical Analysis, Singapore 3Q19 Strategy
Date: 15 July 2019
Clients of Phillip Securities can keep updated with Country Strategy and Singapore Sector Reports by logging into: www.poems.com.sg > STOCKS > Research
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