By Danish Lim, Investment Analyst for Phillip Nova
The Straits Times Index has rallied for 6 consecutive days, tracking Wall Street rally last week. Our analyst said this can be attributed to investor optimism in a US “soft landing” and a belief that the Fed is done with raising interest rates; a narrative further supported by soft US labour data last Friday and a Fed pause last week.
He pointed out that although the STI gained +2.67% last week, it still underperformed the S&P 500, which rallied by +5.85%, its best week in 2023. Given the scale of last week’s rally and the subsequent decline in the Dollar and Treasury yields last Friday, there could be room for our local stock market to catch up to our western counterparts this week, given improved investor sentiment.
On key indicators or drivers that investors should keep an eye on for potential market shifts this week, our analyst said trade data (export & imports) from China on Tuesday should be key to watch, given recent comments from Chinese premier Li Qiang, who pledged to boost imports. At the same time, Thursday will see the release of producer price inflation and consumer price inflation data; while Friday will provide investors with bank lending and credit data. These data releases should have a sizeable impact on Singapore equities, given our local stock market’s moderate sensitivity to China.
It will also be important to keep an eye on Powell’s opening remarks at the central bank’s Division of Research and Statistics Centennial Conference on Wednesday; as well as his speech at an IMF conference on Friday, where he may shed some light on the interest rate trajectory moving forward.
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