Market watchers will be focused on corporate earnings next week. In Singapore, Sabana Industrial REIT kicks off the 1Q2024 earnings season. In Apr 15-19, more than 840 US firms are reporting, of which 47 are in the S&P 500, from a mix of sectors including technology, consumer discretionary, leisure/entertainment, defense and MNCs.
Market barometers appear a little nervous. The Straits Times Index lost 2 points week-on-week to end at 3,216. In the near term, the STI is likely to hang around this level, in a narrow range between 3,250 and 3,200 as ADX flattens and moves sideways. Since directional indicators are still positive, the any further decline is likely to be shallow.
The S&P 500 seems to have established a minor support at 5,100, but it too may remain in a consolidation range as this was a week where good news was bad news for the market, and bad new was also bad news for the market. The US jobs report came in more robust than expected. For March, total nonfarm payroll employment rose by 303,000, and the unemployment rate stayed little changed at 3.8% according to the US Bureau of Labour Statistics.
While good for the economy, the jobs report wasn’t good for the outlook for the Federal Funds Rate and the risk-free rate as measured by the yield on the 10-year US treasuries. It remained elevated at 4.53%.
Inflation remained stubbornly high. Inflation rose by a strong-than-expected 3.5% y-o-y in March, an an uptick from the 3.2% y-o-y rise in February. This, coupled with March's strong employment report, suggests the path to the Fed's 2% inflation target could take longer than expected, JP Morgan has said.
While the US economy is running hotter than expected, the Chinese economy cooled further. Its March trade figures were mundane. Merchandise exports posted a 7.5% y-o-y decline in translating into a 2.1% y-o-y rise in exports in 1Q2024. Imports shrank -1.9% y-o-y in March, translating into a 1.8% y-o-y rise in 1Q2024.
See also: STI continues to move sideways as ominous signs develop in US Treasury yields
The bellwether for Chinese stocks on SGX, the Lion-OCBC Securities China Leaders ETF which reflects the movement of the Hong Kong Stock Connect 80 Index, fell back towards the breakout level of $1.42. A break below this level will imply the breakout has failed.
