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Dollar Index slides for the third day, STI advances ahead of earnings season

By Margaret Yang, CMC Markets

Equities – Asian equity markets rebounded sharply yesterday, led by the Nikkei 225 which rallied 3.6%. Nikkei futures continued to go higher after the cash market closed. Market sentiment shifted to the positive side as crude oil recovered its losses and stands above $40 again.  The US market finished higher as IBM delivered better-than-expected 1Q earnings.

Singapore’s earnings season will kick off this week. Local investors and traders will be watching 1Q earnings results of the biggest local companies in the coming weeks to find a clue on how economic headwinds have affected corporate earnings. The sentiment is optimistic, as the Straits Times Index advanced 34 points or 1.1% to its highest level this year ahead of earnings season. It has broken out through the key resistance level of 2,917 and this has opened the door for potential upside momentum with the next resistance level at 3,038.

Chinese companies accelerated the pace in the overseas M&A race. According to an unidentified source, the country’s sovereign fund - China Investment Corp - has expressed interest in buying Yum! Brands Inc.’s Chinese business, which includes over 7000 KFC and Pizza Hut restaurants on the mainland. This deal is potentially valued at $7-8 billion.

Commodities – Crude oil futures rebounded as the strike in Kuwait continued to dampen crude output in the short term. US crude futures settled 3.3% higher at $41.08 per barrel. The panic associated with the failure of the Doha meeting will gradually fade away and the market will start to look forward. Gold continued to trade in a range bound between $1,220 - $1,260. However, a potential “head and shoulder” pattern has formed, which warns of potential downside if earnings season brings positive surprises that quench the demand for safe-haven assets.

Foreign Exchange (FX) – The US Dollar Index has fallen for the third day, approaching a key support level at 94.00. A weaker USD sent other currencies higher, with AUD/USD trading at 10-months highs. USD/JPY has rebounded to 109.10 this morning. The immediate support level is 107.65 and the resistance is 110.00. USD/CAD retraced back to 1.2770 as the oil price rebound lifted commodity currencies. AUD/USD extended its rally and hit 0.7800 this morning, a fresh high this year. USD/SGD also pulled back to the 1.3400 area.

US Dollar Index June 2016

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Earnings Calendar for Singapore blue chips

Company NameDatePeriodEPS Estimate
CapitaLand Ltd20/4/2016Q1 20160.05
Singapore Exchange Ltd20/4/2016Q3 20160.085
Sembcorp Marine Ltd27/4/2016Q1 20160.021
United Overseas Bank Ltd28/4/2016Q1 20160.435
Oversea-Chinese Banking Corp Ltd29/4/2016Q1 20160.215
Jardine Cycle & Carriage Ltd29/4/2016Q1 20160.54
Yangzijiang Shipbuilding Holdings Ltd29/4/2016Q1 20160.15
DBS Group Holdings Ltd3/5/2016Q1 20160.42
Sembcorp Industries Ltd4/5/2016Q1 20160.058
StarHub Ltd5/5/2016Q1 20160.045
Ascendas Real Estate Investment Trust5/5/2016Y  20160.152
SIA Engineering Co Ltd10/5/2016Y  20160.162
Wilmar International Ltd10/5/2016Q1 20160.04
City Developments Ltd11/5/2016Q1 20160.14
Singapore Airlines Ltd12/5/2016Y  20160.669
UOL Group Ltd12/5/2016Q1 20160.115
Golden Agri-Resources Ltd12/5/2016Q1 2016 N.A.
Genting Singapore PLC13/5/2016Q1 20160.008
Singapore Telecommunications Ltd13/5/2016Y  20160.243
Singapore Technologies Engineering Ltd13/5/2016Q1 20160.04
SATS Ltd13/5/2016Y  20160.202
ComfortDelGro Corp Ltd13/5/2016Q1 20160.031
Thai Beverage PCL13/5/2016Q1 20160.29
Global Logistic Properties Ltd19/5/2016Y  20160.048

 

About the author

Margaret Yang Yan, CFA, is a market analyst for CMC Markets Singapore.