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US market bounces back but uncertainty on Fed’s plans still weighs on sentiment | | | | | | From: NetResearch Asia [mailto:postman@netresearch-asia.com]
Sent: Tuesday, June 18, 2013 9:58 AM
To: NetResearch Asia 18 Jun 2013
Subject: US market bounces back but uncertainty on Fed’s plans still weighs
on sentiment
Pre-Market Open Commentary for 18 June 2013
( CO. REG. NO.
199904258C )
DJIA: 15179.85 +109.67
Nasdaq Composite: 3452.13 +28.58
Good morning, fellow investors
Following another volatile session, US stock market recovered from the lows
to close firmer on Monday although investors remained on edge regarding the
Federal Reserve’s plans to scale down the US$85 bil monthly bond-buying
program. This is evident in the weaker stock prices during the session
following a media report that the Fed chairman Ben Bernanke is likely to
signal that the central bank is “close to paring down” its US$85bil asset
purchase during the press conference this Wednesday during the policy
meeting but prices swiftly recovered when market noted that the report did
not contain much new information.
Positive economic news also lifted sentiment. Homebuilder sentiment rose
with the National Association of Home Builders' index soaring to 52 in
June, marking the first time the index rose above 50 since April 2006, up
from 44 in May. Higher homebuilder confidence came on the back of low
inventory of existing homes and an increasing demand for new homes, and
further pointed to a sustained growth momentum in the housing market.
Separately, the New York Fed's "Empire State" manufacturing index rose to
7.84 in June, exceeding expectations of a reading of zero and a sharp
improvement from a reading of minus 1.43 in May. However, the
forward-looking new orders index reading weakened, signaling that the
economy lost growth momentum heading into 2Q2013.
On the corporate front, shares of Boeing rose 1.18% following news that the
leasing arm of General Electric has committed to purchase 10 of its new 787
Dreamliners at the Paris Air Show. Boeing’s CEO also reassured that the
battery problems with the 787 Dreamliner have been fixed.
The three major US indices rebounded with the Dow Jones Industrial Average
gaining 0.73% while the S&P 500 rose 0.76% to 1639.04. The Nasdaq advanced
0.83%.
On Tuesday, market will take leads from data on housing starts and building
permits for signs of continuous growth momentum in the US housing market as
well as consumer price index reading for a gauge on inflation. The US
Federal Reserve will commence its policy meeting on the same day.
Crude oil prices have been edging higher as tensions in the Middle East
escalated but managed to ease off with crude oil for July delivery dipping
US$0.08 a barrel, or 0.08%, to settle at US$97.77 a barrel.
In Singapore today:
Singapore stock market opened lower on Monday on knee-jerk selling in
reaction to Wall Street’s correction last Friday but reversed into the
black on short-covering and light bargain-hunting. Shares advanced in thin
trades ahead of a Federal Reserve meeting over this Tuesday and Wednesday
when market will closely watch for clues into the central bank's plans to
pare back some of its monetary stimulus. At closing, the benchmark STI
index advanced 22.01 points, or 0.70%, to 3183.44. For every stock that
fell, 1.6 rose. Turnover was 1.8 bil shares with a value of $1.2 bil
traded.
According to International Enterprise (IE) Singapore, Singapore’s non-oil
domestic export (NODX) unexpectedly fell a seasonally adjusted 4.6% YoY in
May, against expectations of a 0.2% dip, and exceeding a 1% YoY fall in
April, weighed down by a larger than expected decline in electronics
shipment of 13.2% YoY which outweighed a marginal growth of 0.2% YoY in the
pharmaceuatical sector. On a QoQ basis, NODX fell 1.1% MoM in May after a
1.1% MoM expansion in April. Despite the faltering trade numbers in May,
economists are still expecting a stronger 2Q2013 GDP number compared to an
expansion rate of 0.2% YoY and 1.8% QoQ in 1Q2013 as the overall 2Q2013
NODX reading is still expected to be stronger than that in 1Q2013.
Expect some bargain-hunting today as positive leads from US market could
lift investor confidence and risk appetite. But, the overall sentiment is
expected to remain cautious ahead of the Fed meeting starting tonight.
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9:38 AM (3968 days ago)
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