Daily Morning Note – 2 August 2018

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YOUR PHILLIP SUMMARY

Stocks slipped on Wednesday as renewed trade concerns offset strong gains in tech. Investors also digested the Federal Reserve’s latest decision on monetary policy. The Nasdaq Composite bucked the lower trend, however, closing 0.4 percent higher at 7,707.29 on the back of strong gains of >5% from Apple after a strong set of results. Tesla shares also surged as much as 11% after-hours as upbeat CEO Elon Musk sees a profitable second half.

Reuters reported, citing a source, the Trump administration is looking at the possibility of slapping a 25 percent tariff on $200 billion worth of imported Chinese goods — after initially setting them at 10 percent.

The Federal Reserve concluded a two-day meeting on monetary policy on Wednesday in which it left interest rates unchanged. The decision was widely expected, but the central bank upgraded its view on the economy, calling it “strong.”

RESEARCH REPORTS

Sheng Siong Group – Fresh products keep gaining traction
Recommendation: ACCUMULATE, Last Close Price: $1.07
Target Price: $1.13, Analyst: Phillip Research Team
– 2Q18 Revenue and PATMI met expectations
– Both new stores and SSSG drove revenue growth. Market share gains and
wider distribution of stores were key ingredients to sales growth
– Gross margins keep touching new highs due to fresh products
– Maintain ACCUMULATE. Forecast and target price unchanged at S$1.13


BREAKING NEWS

U.S. stocks close mostly lower as Fed stands pat; Apple buoys tech shares. The Dow Jones Industrial Average DJIA, -0.32% slid 81.37 points, or 0.3%, to 25,333.82. The S&P 500 SPX, -0.10% shed 2.93 points, or 0.1%, to 2,813.36. The Nasdaq Composite Index COMP, +0.46% gained 35.50 points, or 0.5%, to 7,707.29.

Oil falls 2% on rising supply, concern about trade tensions. Brent crude futures fell US$1.82 to settle at US$72.39 a barrel, a 2.5 per cent loss. US West Texas Intermediate (WTI) crude futures fell US$1.10 to settle at US$67.66 a barrel, a 1.6 per cent loss.

US hiring surges in July: ADP survey. ADP said the private sector added 219,000 new jobs, the most since February and surpassing the 175,000 consensus forecast among economists.

US factory activity slows. The Institute for Supply Management (ISM) said its index of national factory activity fell to a reading of 58.1 last month from 60.2 in June.

China’s central bank steps up effort to boost lending. China’s central bank has started actively encouraging banks to extend more credit by taking a softer stance on loan quotas, people familiar with the matter said, as authorities ratchet up efforts to bolster a cooling economy.

DBS reports 18% gain in Q2 profit, flags uncertainty over US-China tensions. Net profit for the three months ended June 30, 2018 stood at S$1.33 billion, compared to S$1.13 billion posted in the year-ago period. This translated to an annualised earnings per share of S$2.10, up from S$1.76.

Source: SGX Masnet, Bloomberg, Reuters, The Business Times, Channel NewsAsia, Phillip Securities Research

Clients of Phillip Securities can keep updated with Country Strategy and Singapore Sector Reports by logging into: www.poems.com.sg > STOCKS > Research

Read the research report(s), available through the link(s) above, for complete information including important disclosures

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