Daily Morning Note – 23 November 2021
PHILLIP SUMMARY
The S&P 500 ended lower and the Nasdaq tumbled deep into negative territory on Monday after both earlier hit record highs following the announcement of a second term for Federal Reserve Chair Jerome Powell. The Dow Jones Industrial Average ended slightly higher. Climbing Treasury yields kept tech stocks broadly lower, with holdouts including Microsoft and Apple, which many investors view as relatively safe, giving up gains late in the session. The Dow Jones Industrial Average rose 0.05 per cent to end at 35,619.25 points, while the S&P 500 lost 0.32 per cent to 4,682.94. The Nasdaq Composite dropped 1.26 per cent to 15,854.76.
Local shares began the week on a more upbeat showing, as Singapore further eased its Covid-19 restrictions related to dining and social gatherings amid an improvement in overall infection numbers. Investors appeared slightly more optimistic, with the benchmark Straits Times Index gaining 0.2 per cent or 4.74 points to cap off Monday at 3,237.08. Across the broader market, however, decliners surged past advancers 282 to 190, after some 1.7 billion securities worth S$936.5 million changed hands.
BREAKING NEWS
SG
Global offshore group Keppel FELS has landed a contract from a renewable energy company to construct two offshore substations worth around S$110 million. The project is scheduled to be completed in 2024, to be deployed in an offshore wind farm. Keppel FELS, a wholly-owned subsidiary of Keppel Offshore & Marine (Keppel O&M), said in a bourse filing on Monday that its work scope comprises the engineering, procurement, construction, testing and comissioning for the topside modules of the two offshore substations. This excludes the offshore substations’ foundations and electrical components that will be furnished by the client.
Temasek has received valid applications of more than 6 times the amount available in its 5-year Singapore dollar bond issue. The retail tranche of the offering drew S$649.5 million in applications, when the public offer closed at noon on Monday (Nov 22). The offer of the T2026-S$ Temasek Bond, issued via its wholly-owned subsidiary Temasek Financial (IV), comprises 1.8 per cent fixed rate guaranteed notes due 2026. An allocation process will take place following the closure of the offer, with its results expected by the evening of Nov 23. Temasek had said it would take into account the investor demand from applications received before deciding on the final allocation approach. This is the second Temasek bond with a retail tranche. The last time it did so was in 2018 with the 5-year T2023-S$ Temasek Bond, which closed at a fixed interest rate of 2.7 per cent per annum.
Catalist-listed protective gear manufacturer Medtecs International Corp reported a 77 per cent slide in net profit for the 9 months ended September 2021 to US$19.26 million, as demand for personal protective equipment fell. Stock-piling exercises for existing customers in 2020 have completed, while the supply and prices of the personal protective equipment (PPE) market have stabilised globally, the group said in a business update filed with the Singapore Exchange on Monday (Nov 22). In a separate update on its joint venture with US healthcare market player ACO International, Medtecs said its wholly-owned subsidiary Medtecs (Asia Pacific) and ACO are in discussions to enter into a share subscription agreement. Following an initial capital injection, the joint venture company Resilient Medical will have an initial issued and paid-up capital of US$9 million comprising 6 million ordinary shares held by Medtecs (Asia Pacific) and 3 million ordinary shares held by ACO.
US
Sales of previously owned US homes rose unexpectedly in October to the highest level since the start of the year, pointing to healthy demand as more buyers take advantage of stronger job growth and low mortgage rates. Contract closings increased 0.8 per cent from the prior month to an annualised 6.34 million, figures from the National Association of Realtors showed Monday. The median forecast in a Bloomberg survey of economists called for a 6.2 million pace in October. While the monthly pace of sales has settled back after reaching a 14-year high a year ago, they remain well above pre-pandemic levels. Sales are on track to exceed 6 million this year, which would be the strongest since 2006.
President Joe Biden selected Jerome Powell for a second four-year term as US Federal Reserve chair and elevated Governor Lael Brainard to vice-chair, maintaining consistency at the central bank as it grapples with the fastest inflation in three decades, along with the lingering effects of the coronavirus pandemic. The move, announced by the White House on Monday, rewards Powell for helping rescue the US economy from the pandemic and tasks him with protecting that recovery from a surge in consumer prices. A Republican, Powell faces what will likely be a smooth confirmation in the Senate, where he was backed for his first term as chair in an 84-13 vote and whose members he subsequently worked hard to woo. Brainard replaces Richard Clarida in the vice-chair slot and may face opposition from Senate Republicans for her confirmation. She was interviewed by Biden for the chair position and was seen as a strong contender for the separate job of vice-chair for supervision, which remains vacant.
Source: SGX Masnet, The Business Times, Bloomberg, Channel NewsAsia, Reuters, CNBC, PSR
Technical Pulse: Keppel Corp Ltd
Recommended: Technical BUY; Analyst: Chua Wei Ren
Keppel Corp (SGX: BN4) Failure to break the gap resistance zone in October caused the price to fall sharply. But the positive outlook is because the price managed to remain above the resistance turned support at $5.30
Buy spot: 5.39 Stop loss: 5.05 Take profit 1: 6.00 Take profit 2: 7.01
Technical Pulse: Straits Trading Co/Ltd
Recommended: Technical BUY; Analyst: Chua Wei Ren
Straits Trading Co/Ltd (SGX: S20) Impulse bullish upside is set to return after a slight correction
Buy stop: 3.54 Stop loss: 3.20 Take profit 1: 3.90 Take profit 2: 4.20
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