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Subject: Light week ahead in US market as pace of earnings release tapers
and with few economic releases
DJIA: 14973.96 +142.38
Nasdaq Composite: 3378.63 +38.01
Good morning, fellow investors
US stocks finished the first trading week in May on a high note, with all
the three major indices ending about 1% higher, propelled by stronger than
expected April nonfarm payroll report. The US economy added 165,000 jobs in
April, against expectations of 150,000 job additions, and a strong
improvement from a disappointing 88,000 job addition in March while the
unemployment rate dipped to a four-year low of 7.5% (against expectations
of no change in the rate) from 7.6% in March, easing concerns about a
summer slowdown in the economy. Further fueling optimism is the fact that
the unemployment rate is still well above the 6.5% level at which the
Federal Reserve (Fed) will start to ease its stimulus program and this
continuous monetary support from the Fed will continue to be positive for
the asset prices and jobs market.
The strong jobs data overshadowed other less encouraging economic data
released on Friday. The pace of growth in the vast US services sector
slowed in April to its weakest pace in nine months, with the Institute for
Supply Management services index falling to 53.1 in April, below
expectations of a reading of 54, from 54.4 in March. Separately, new orders
for US factory goods recorded the biggest drop in seven months in March,
falling 4%, below expectations of a 2.6% fall and after a gain of 1.9% in
February. However, on a positive note, stripping out aircraft order, orders
for non-defense capital goods, a gauge of planned business spending, has
turned around, rising 0.9% in March after a 3.2% fall in February,
suggesting businesses are continuing to spend despite a slowdown in factory
activity.
European markets rose as well despite a grim economic forecast from the
European Union which trimmed the eurozone gross domestic product for both
2013 and 2014 to a decline of 0.4% in 2013 and a gain of 1.2% in 2014.
The strong Friday close led all the three major indices logging in gains
for last week with Dow Jones Industrial average rising 1.78% while the S&P
500 rose 2.03% to close at 1614.92. The Nasdaq outperformed, gaining 3.03%
for the week.
It will be a relatively quiet week ahead as the pace of earnings slows down
towards the tail-end of the earnings season and with few economic readings
scheduled for release. Major corporate results scheduled for release
include entertainment companies Disney and News Corp, energy firms Marathon
Oil, Anadarko and Holly Frontier as well as Whole Foods. On economic
readings, focus will be on consumer credit data on Tuesday as well as
wholesale trade and weekly jobless claims reports on Thursday. Market will
also look to inflation data from China on Wednesday.
Crude oil for June delivery rose US$1.62 a barrel, or 1.72%, to settle at
US$95.61 last Friday, contributing to a weekly gain of US$2.61 a barrel, or
2.81%.
In Singapore today:
Singapore’s benchmark STI index retreated last Friday led by profit-taking
of banking shares, particularly DBS and UOB which rallied the previous day
following 1QFY13 corporate earnings, as well as a sell-off in Genting
Singapore following an unexpected 44% plunge in earnings. Trading over the
past week was focused on selected blue-chips and rotational play on penny
caps. At closing, the STI index tumbled 32.49 points, or 0.95%, to close at
3369.90 but for the week, the benchmark index rose 21.03 points, or 0.63%,
propelled largely by net gains in banks.
Expect a positive start to the trading week on growing investor confidence
and risk appetite following stronger than expected jobs data in the US last
Friday. On Malaysia politics, the country’s 13th general election concluded
last night with the ruling Barisan Nasional winning a majority of 133
seats, allowing it to extend its 56-year rule. |
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Light week ahead in US market 06/05
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06-May 2013 Monday
1:03 PM (4012 days ago)
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