DAILY MORNING NOTE | 4 October 2023

Trade of the Day

Exxon Mobil Corporation (NYSE: XOM)

Analyst: Zane Aw

(Current Price: US$115.63) – TECHNICAL SELL
Sell price: US$115.63 Stop loss: US$118.60 (-2.57%)
Take profit 1: US$111.30 (+3.74%) Take profit 2: US$107.60 (+6.94%)

Singapore shares ended in the red on Tuesday (Oct 3), tracking regional losses. It fell 0.5 per cent or 16.51 points to 3,192.35. Across the broader market, losers outnumbered gainers 364 to 235, with 1.3 billion securities worth S$909.1 million changing hands. Hong Kong’s Hang Seng Index lost 2.7 per cent after returning from a holiday, while Japan’s Nikkei 225 shed 1.6 per cent. FTSE Bursa Malaysia KLCI edged up 0.1 per cent.

Wall Street stocks tumbled on Tuesday as Treasury yields hit a 16-year high, feeding worries about elevated interest rates that could weigh on the economy. The Dow Jones Industrial Average slipped 1.3 per cent to 33,002.38. The broad-based S&P 500 dropped 1.4 per cent to 4,229.48, while the tech-rich Nasdaq Composite Index fell 1.9 per cent to 13,059.47.

SG

Engineering-services company Boustead Singapore has been granted a 45-day extension by the Singapore Exchange Regulation (SGX RegCo) to submit an update for its exit-offer proposal, the company said in a bourse filing on Tuesday (Oct 3). This puts the deadline at Nov 14, with the date falling 45 days from Sep 30, the end of the first half of its financial year ending Mar 31, 2024. Boustead said it will update shareholders on material developments on the exit offer proposal, when appropriate. The company’s shares rose S$0.005, or 0.59 per cent, to close at S$0.85 on Tuesday.

Singapore’s overall manufacturing sentiment headed back into positive territory for the first time in six months in September, suggesting that the manufacturing slump may have bottomed, and that the sector could stabilise in the coming months. The purchasing managers’ index (PMI) edged up to 50.1 in September, a 0.2-point gain from August, data from the Singapore Institute of Purchasing and Materials Management (SIPMM) indicated on Tuesday (Oct 3). A reading above 50 on the index indicates growth from the previous month, while one below 50 points to a contraction. The linchpin electronics sector gained 0.3 point to 49.8 in September – staying in contraction territory for the 14th consecutive month. However, the sector shrank more slowly than in the month before.

Investors’ watchdog Securities Investors Association (Singapore), or Sias, on Tuesday (Oct 3) raised questions over why engineering firm Advanced Holdings capital reduction exercise appears to have failed. In an Aug 23 announcement signed by Advanced Holdings’ managing director (MD) Wong Kar King, the company said it is proposing to undertake a capital reduction exercise to write off accumulated losses of the company amounting to S$15.18 million as at Dec 31, 2022. It also proposed to return to shareholders the company’s surplus capital through a cash distribution of approximately 23.2 Singapore cents for each ordinary share. However, the proposal did not succeed at the extraordinary general meeting (EGM) held on Sep 29 – an outcome that David Gerald, founder, president and chief executive of Sias, said came as a “shock” to shareholders. Only 18.99 per cent of the votes were for the proposal.

US

Oil prices recovered to settle slightly higher on Tuesday after sinking to three-week lows, pressured by a stronger US dollar and darkening global economic signals but supported by tightening crude supply. Brent crude oil futures settled 21 cents higher at US$90.92 a barrel, after falling to a session low of US$89.50, the lowest since Sept 8. US West Texas Intermediate crude (WTI), settled up 41 cents at US$89.23 per barrel. The session low was US$87.76, the weakest since Sept 12.

US job openings unexpectedly increased in August, pointing to tight labour market conditions that could compel the Federal Reserve to raise interest rates next month. Job openings, a measure of labour demand, jumped 690,000 to 9.610 million on the last day of August, the Labor Department said in its monthly Job Openings and Labour Turnover Survey, or JOLTS report, on Tuesday (Oct 3). Data for July was revised higher to show 8.920 million job openings instead of the previously reported 8.827 million. Economists polled by Reuters had forecast 8.8 million job openings in August.

The 10-year Treasury yield, which serves as a benchmark for mortgage rates and as an investor confidence barometer, on Tuesday surged to its highest level since 2007. The 10-year Treasury yield was last up 11 basis points to 4.793, after climbing to 4.8% earlier on Tuesday. The 30-year Treasury yield rose as high 4.924%, also the highest since 2007. The 2-year Treasury yield, which is sensitive to expectations around where the Federal Reserve will set its own key borrowing rate, increased slightly to 5.144%.

United Airlines is ordering 110 additional Boeing and Airbus jetliners, locking in a supply of new planes into the next decade as strong demand and supply chain challenges make new delivery slots scarce. United’s order consists of 50 more Boeing 787 Dreamliners, adding to a firm order of 100 of the twin-aisle planes it announced last December, along with 50 more options. The airline has aggressively expanded its international service to try to capitalize on a resurgence of trips abroad, destinations that the new long-range 787 planes would serve. The Chicago-based airline is also buying 60 Airbus A321neos, on top of the 120 it previously had on order with the European manufacturer, including 50 of forthcoming extra-long-range version. United added options for 40 more Airbus A321s.

Source: SGX Masnet, Bloomberg, Channel NewsAsia, Reuters, CNBC, WSJ, The Business Times, PSR

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