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Market Snapshot
Friday, 12 May 2017
Global Stocks Mixed after Wall Street Touches Record Highs
THE DAY AHEAD
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Singapore releases March’s retail sales numbers.
Germany announces its 1Q17 flash gross domestic product (GDP) and
April’s inflation data.
India releases April’s wholesale price index (WPI) inflation, food, fuel,
and manufacturing data; as well as March’s industrial production,
inflation rate, and manufacturing production.
China is expected to post April’s new yuan loans, foreign direct
investment, and M2 money supply.
Hong Kong announces 1Q17 GDP.
The Euro Area releases March’s industrial production numbers.
Key data releases from the US include March’s business inventories,
April’s inflation, retail sales, and May’s preliminary Michigan consumer
sentiment, current conditions, and inflation expectations readings.
EQUITY MARKETS
Shown in local currency terms.
S&P 500
DJ Euro Stoxx 600
-0.2%
-0.5%
0.3%
Nikkei-225
0.7%
MSCI Asia ex-Japan
0.5%
MSCI Emerging Markets
OVERVIEW
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US stocks drop from records as Treasuries rise, crude rallies.
European equities slip as Bank of England says it has not planned for a
disorderly Brexit.
Most Asian markets finish higher on lifts in investor sentiment across
the region. Taiwan’s benchmark crosses 10,000 for the first time in 17
years.
Crude continues to trend up on signs that the market is tightening.
The dollar is weaker against the yen; DXY remains little changed
despite robust April producer prices.
See how DBS Chief Investment Officer Lim Say Boon thinks global
equities (outside the US) will fare, in the next 100 days of Donald
Trump’s presidency.
US TREASURY YIELD CURVE
Shows the yield to maturity of current US bills, notes, and bonds.
4.0%
5.0%
3.0%
4.0%
3.0%
2.0%
2.0%
1.0%
1.0%
DEVELOPED MARKET EQUITIES
US
US stocks fell from records, though losses eased in afternoon trading as
crude’s rally took the price of a barrel back above USD48 in New York.
Treasuries rose with gold as tepid earnings raised new doubts about the
strength of the American consumer.
The S&P 500 Index pared the worst of its declines by more than half as
health care and consumer staples producers rebounded. It closed the
session 0.22% lower at 2,394.44, after dropping as much as 0.75%.
Retailers remained under pressure as disappointing results from Macy’s Inc
(-17.01%) and Kohl’s Corp (-7.84%) added to concerns that the US
consumer continues to hold back on spending. The dollar was little
changed, while Treasury yields slipped below 2.40% on 10-year notes.
The weak sales at department stores underscored rising angst that the
biggest part of the US economy is not picking up the pace enough to raise
growth rates. Investors will get a fresh read on Friday (12 May) with US
retail sales data. At the same time, political intrigue continues to roil
Washington two days after the president abruptly fired the head of the
Federal Bureau of Investigation (FBI). The path for interest rates will remain a
major focus amid growing bets for a Federal Reserve increase in June and
1M
1M
3M
3M
6M
6M
1YR 2YR 3YR 5YR 7YR 10YR 30YR
0.0%
0.0%
1YR 2YR 3YR 5YR 7YR 10YR 30YR
One year ago
Last Close
Source: DBS CIO Office, Bloomberg, as of the last business day.
Visit the Markets Movers page for more insights:
Market Snapshot 12 May 2017
talk of tapering by the European Central Bank. – Bloomberg News.
EUROPE
2
Equity Markets
Returns of equity indices around the world, in local currency terms.
Close
Overnight
YTD
DJIA
20919.42
-0.11%
5.85%
S&P 500
2394.44
-0.22%
6.95%
NASDAQ
6115.96
-0.22%
13.61%
Europe
Euro Stoxx 600
394.39
-0.52%
9.12%
Germany
DAX
12711.06
-0.36%
10.71%
France
CAC-40
5383.42
-0.32%
10.72%
UK
FTSE100
7386.63
0.02%
3.41%
Asia
MSCI AxJ
608.46
0.69%
18.30%
JAPAN
Japan
Nikkei-225
19961.55
0.31%
4.43%
Japan’s Nikkei 225 Index opened 0.16% lower at 19,929.12 on Friday (12
May) morning, after an overnight slide in US equities.
China
SHCOMP
3061.50
0.29%
-1.36%
Hong Kong
Hang Seng
25125.55
0.44%
14.20%
The benchmark closed 0.31% higher at 19,961.55 on Thursday (11 May),
extending its 0.29% rise on Wednesday (10 May). Seven of its 12 industry
segments closed higher, with telecommunication services (+1.49%) leading
the pack and pulling the index 25.88 points higher. Three of the four stocks
on the sub-index rose – SoftBank Group Corp gained 2.01%, KDDI
Corporation added 0.82%, and Nippon Telegraph & Telephone Corporation
rose 0.69% – but NTT DoCoMo Inc fell 0.48%. Health care and information
technology stocks also each lifted the benchmark by double digits, with
increases of 0.67% and 0.56%, respectively. Terumo Corporation and
Tokyo Electron Limited, meanwhile, rose 4.43% and 2.34%, respectively.
Taiwan
TWSE
10001.48
0.33%
8.08%
South Korea
Kospi
2296.37
1.16%
13.32%
Indonesia
JCI
5653.01
0.00%
6.73%
Malaysia
KLCI
1775.39
0.50%
8.14%
Singapore
STI
3271.11
0.65%
13.55%
India
Sensex
30250.98
0.01%
13.61%
1000.35
0.53%
16.01%
European stocks ended a two-day advance as Bank of England (BOE)
Governor Mark Carney said the institution has not planned for a disorderly
Brexit.
The Stoxx Europe 600 Index fell 0.52% to 394.39 at the close, the most
since 18 April. While the BOE left the benchmark interest rate unchanged
Thursday (11 May), Carney said it has not modelled for a disorderly Brexit
process, in response to a question on how much the central bank’s
forecasts are based on the assumption of a “smooth” exit from the
European Union. The Stoxx 600 added 0.16% Wednesday (10 May) as oil
companies rallied after data showed US crude stockpiles fell the most this
year. – Bloomberg News.
However, industrials – the Nikkei 225 Index’s heaviest-weighted segment –
slipped 0.27%. It was hurt the most by Daikin Industries Ltd and Kubota
Corporation, which fell 0.72% and 3.59%, respectively. Increases in NSK
Ltd (+4.43%) and Minebea Mitsumi Inc (+3.11%) were not enough to
offset the drag. Energy stocks (-0.70%) fell the most.
ASIAN EQUITIES
CHINA
Shanghai shares erased losses in the afternoon, with consumer and utilities
stocks leading the rebound, amid speculation that authorities may inject
funds into the financial system. The Shanghai Composite Index rose 0.29%
to 3,061.50 at the close after falling as much as 1.2%. The CSI 300 index of
blue chips climbed 0.57% to 3,356.65. But the Shenzhen Composite Index
extended its slide by another 0.19%, bringing it to 1,819.15.
Reuters reported that the People’s Bank of China is expected to pump in
funds through the medium-term lending facility loans on Friday (12 May),
which helped to lift sentiment. China’s equities have been bogged by the
authorities’ efforts to reduce risks in the financial sector. The Shanghai
Composite Index has fallen around 5% since the start of April, Bloomberg
reported.
HONG KONG
China’s state-backed institutions have set aside funds to ensure stable
trading in Hong Kong’s stock market before the twentieth anniversary of
Hong Kong’s 1997 handover, according to people with direct knowledge of
the matter. Xi Jinping is expected to visit the city for the first time as
president to mark 20 years of Chinese rule. While state-directed funds
intervene regularly to manage swings in China’s USD6.6t equity market, the
government has not been known to take an active role in Hong Kong. The
former British colony, which sits near the top of global free-market
rankings, is supposed to enjoy a high degree of autonomy under the “one
country, two systems” principle enshrined in China’s power-transfer
agreement with the UK. Lines between the two markets have blurred in
recent years with the introduction of cross-border exchange links and
cooperation agreements between the Chinese and Hong Kong securities
regulators.
The benchmark Hang Seng Index rose 0.44% to 25,125.55 and the Hang
Seng China Enterprises Index was up 0.30% to 10,257.63.
Index
US
Emerg. Mkt MSCI EM
Government Bonds
Benchmark yields of major 10-year government bonds.
Latest yield
Previous yield
Change (bps)
US
2.39%
2.41%
-2.67
Germany
0.43%
0.42%
1.00
Japan
0.05%
0.04%
1.20
China
3.68%
3.70%
-2.30
Taiwan
1.10%
1.10%
0.17
South Korea
2.31%
2.30%
0.70
Indonesia
7.26%
7.26%
0.00
Singapore
2.21%
2.20%
1.01
India
6.94%
6.94%
-0.10
Commodity futures
Prices of one-month futures contracts, grouped by commodity type.
WTI crude ($/bbl)
Close
1-day
change
1-yr
high
1-yr
low
47.83
1.06%
55.24
39.19
Gold ($/oz.)
1224.20
0.43%
1377.50
1123.90
Copper ($/ton)
5521.75
0.79%
6130.50
4545.15
Corn (cents/bu.)
360.50
-1.30%
439.25
301.00
Soybean (cents/bu.)
956.00
-0.60%
1208.50
929.75
Wheat (cents/bu.)
426.00
0.47%
524.00
359.50
Coffee (cents/lb)
134.25
-1.76%
183.50
128.65
Sugar (cents/lb)
447.60
-1.30%
590.10
442.70
Source: Bloomberg, as at the close of the last business day.
YTD refers to year-to-date returns.
Market Snapshot 12 May 2017
In company news, Apple Inc supplier AAC Technologies Holdings Inc
tumbled the most on Hong Kong’s benchmark gauge, sliding 10.45%, after
short-seller Gotham City Research questioned the company’s profit margins.
AAC Technologies said in a statement it “vigorously denies” the claim in the
report. The stock was the top performer on the Hang Seng Index this year
through Wednesday. Semiconductor Manufacturing International
Corporation fell 2.77% in Hong Kong after the company changed its CEO
and said revenue may fall. – Bloomberg News.
REST OF ASIA
In Sydney on Friday (12 May) morning, the S&P/ASX 200 declined 0.14% to
5870.20, as sentiment was dampened by tepid corporate earnings in Wall
Street overnight. The country’s shares inched higher on Thursday (11 May)
as gains in health care and consumer staples offset declines elsewhere. The
S&P/ASX 200 ended 0.05% higher at 5,878.34. Mixed performance in the
heavily-weighted financials sector and falls in materials stocks weighed
down the index. National Australia Bank Limited rose 0.31% for the day
amid news that Singapore’s Oversea-Chinese Banking Corporation Limited
is buying its private wealth business in Singapore and Hong Kong.
Commonwealth Bank of Australia also advanced for the day, by 0.42%,
while Australia & New Zealand Banking Group Limited and Westpac
Banking Corporation fell 0.31% and 0.09%, respectively.
South Korean stocks tracked regional peers lower on Friday (12 May)
morning. The benchmark Kospi index was down 0.28% to 2,289.87. The
country’s equities jumped on Thursday (11 May) to recover losses from the
previous day. The Kospi index finished 1.16% higher at 2296.37 on broadbased gains. The medical supplies and chemicals sub-indices led gainers,
rising 2.78% and 2.79%, respectively. The winners of the day include
Hanmi Pharmaceutical Company Limited, which soared 7.79%, on
optimism over its drug development plans. Meanwhile, NAVER Corporation
jumped 5.10% and Taekwang Industrial Company Limited surged 4.42%.
Newly-elected South Korean President Moon Jae-in rode into office railing
against the scandal-plagued chaebol – large family-owned business
conglomerates – that dominate the economy, including Samsung Group
and Lotte Group. During his campaign, Moon called for an end to the
“chaebol-focused growth strategy,” blaming it for low wage growth and
joblessness. On his first day in office Wednesday (10 May), Moon said job
creation was his number one task. He unveiled several measures intended to
get more people working, including setting up a presidential jobs
committee and appointing a jobs czar. – Bloomberg News.
Taiwan’s benchmark stock index (Taiex) closed above the 10,000 level for
the first time since the peak of the dot-com bubble as foreign investors
chased a global rally in technology shares. Net inflows into Taiwan equities
have swelled to more than USD15b in the past 12 months, the most among
10 Asian markets tracked by Bloomberg outside of China. Apple Inc
suppliers, such as Taiwan Semiconductor Manufacturing Company Limited,
have been favourite targets amid optimism over demand for the next
iPhone. Its shares (+0.97%) provided the biggest boost to Taiwan’s
benchmark on Thursday as it traded at a record price. The Taiex finished
0.33% higher at 10,001.48, taking its gain for the year to more than 8%.
Optoelectronic and semiconductor shares have been among the leaders on
the benchmark over the past 12 months. – Bloomberg News.
3
FIXED INCOME
US Treasuries rose, with the yield on 10-year notes falling 2.7 bps to
2.3874% after rising for the past three sessions. Losses in equities
offset the upbeat April data for producer prices and the 30-year bond
auction was poorly received. The yield on 30-year Treasury bonds
were 1.5 bps lower at 3.0255%, following a lukewarm auction at
USD15b, the final leg of the USD62b May quarterly refunding this
week.
The yield on two-year Treasury notes, which is the more sensitive to
monetary policy changes, finished 2.0 bps lower at 1.3347%.
German benchmark yield rose 1.0 bps to 0.432% while France 10year bond yield was 3.2 higher bps at 0.874%.
COMMODITIES
Oil climbed for a second day, leaving the worst of last week’s rout
behind for now, as US stockpiles fell and two Organization of the
Petroleum Exporting Countries (OPEC) members said there is a
consensus to extend output cuts. West Texas Intermediate (WTI) oil
rose 1.06% to USD47.83 a barrel after jumping more than 3%
Wednesday (10 May). Brent oil increased 1.10% to USD50.77 per
barrel on the London-based Intercontinental Exchange (ICE) Futures
Europe exchange, after rising 3.06% on Wednesday.
Oil is advancing after tumbling last week to the lowest since OPEC
agreed to trim output in November. All OPEC members support an
extension of the cuts for a second six-month period, as do nonmembers that joined last year’s accord to curtail excess global supply,
Iraq’s Jabbar Al-Luaibi and Algeria’s Noureddine Boutarfa said
Thursday in a joint news conference in Baghdad. – Bloomberg News.
CURRENCIES
The dollar pared its losses against the yen as equities rebounded and
as a round of stale position liquidations abated. The slight rebound
was after stocks easing losses and Treasuries paring gains. At
Thursday closing, the greenback was down 0.37% against the
Japanese currency, despite April producer price index rising more than
expected, adding to the case for a June rate increase by the Federal
Reserve. The currency pair hit its lowest since 11 April earlier in the
session.
The US Dollar Index (DXY) was little changed, shedding a marginal
0.05% to 99.623. The euro fell 0.06% to USD1.0861. The yen was at
113.86 per dollar. The Canadian dollar dropped 0.30% to USD1.3697
after Moody’s Investors Service downgraded six Canadian banks. –
Bloomberg News.
Source: Bloomberg News, DBS Group Research and Vickers (DBS), Dow Jones
N e w s w i re s , Re ute rs , A ge nc e F ra nc e -P re s s e , CN BC , M a rk e tw a tc h . c om
Market Snapshot 12 May 2017
4
FX Round-up (as of New York close)
Last
Overnight
change
Day high
Day low
1.0861
-0.06%
1.0893
1.0839
GBP/USD
1.2886
-0.40%
1.2949
1.2850
USD/JPY
113.8600
-0.37%
114.37
113.46
AUD/USD
0.7379
0.16%
0.7383
0.7336
NZD/USD
0.6849
-1.31%
0.6941
0.6818
USD/CAD
1.3697
0.30%
1.3770
1.3654
USD/SGD
1.4074
-0.23%
1.4129
1.4072
AUD/SGD
1.0385
-0.06%
1.0396
1.0348
NZD/SGD
0.9640
-1.53%
0.9790
0.9624
GBP/SGD
1.8136
-0.62%
1.8271
1.8099
EUR/SGD
1.5286
-0.29%
1.5356
1.5274
AUD/NZD
1.0773
1.50%
1.0781
1.0612
EUR/USD
USD/IDR
13358
0.00%
13366
13347
USD/INR
64.3763
-0.39%
64.5762
64.3375
XAU/USD
1225
0.49%
1227.8
1216
Source: Bloomberg, as of last business day.
SGD Against Major Currencies
108
106
104
102
100
98
96
94
92
90
Nov-16
USD/SGD
GBP/SGD
USD Against Major Currencies
AUD/SGD
EUR/SGD
NZD/SGD
120
EUR/USD
GBP/USD
AUD/USD
NZD/USD
115
110
105
100
95
Jan-17
Mar-17
90
Nov-16
May-17
Jan-17
Mar-17
Source: Bloomberg, as of last business day.
Bond risk rating changes
Effective
USD/JPY
Bond Name
Issuer
Risk rating
New
Existing
Reason
4-May-17
PERTIJ 4 7/8 05/03/22
PERTAMINA PERSERO PT
4
5
Tenor Reduction
5-May-17
BNKEA 6 3/8 05/04/22
BANK OF EAST ASIA LTD
3
4
Tenor Reduction
5-May-17
CMHI 5 05/04/22
CHINA MERCHANTS FINANCE
3
4
Tenor Reduction
8-May-17
BPLN 3.245 05/06/22
BP CAPITAL MARKETS PLC
2
3
Tenor Reduction
Information updated as of 08 May 2017.
May-17
Market Snapshot 12 May 2017
5
GLOSSARY
General Product Risk Rating
A 5-point scale, 1-5, indicates the relative rating of potential loss; “1” being the lowest and “5” being the highest.
Bond Risk Rating
Credit Rating
(S&P / Moody's)
AAA
AA
Outstanding Tenor (Up to X Years)
1
2
3
4
5
1
A
2
BBB
3
6
7
8
9
10
11
12
14
15
16
17
18
19
20
99 Perpetual
3
4
BB
B & Below
5
Equity Sector Classification
Sector
Cond:
Cons:
Enrs:
Finl:
Hlth:
Indu:
Inft:
Matr:
Prop:
13
2
Consumer Discretionary
Consumer Staples
Energy
Financials
Health Care
Industrials
Information Technology
Materials
Property
Valuation Terminology
Equities
EPS:
P/E:
P/B:
EG:
Bonds
YTM:
YTC:
YTP:
Earnings Per Share
Price to Earnings Ratio
Price to Book Ratio
Earnings Growth
Yield to Maturity
Yield to Call
Yield to Put
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