Image from shutterstock

By Margaret Yang, CMC Markets

Markets stay composed ahead of US GDP

Asian markets mostly traded lower on Thursday, as investors tended to take less risk ahead of US Q3 GDP date to be released on Friday evening. The third quarter US GDP will reveal a clearer picture of the world’s largest economy and hint at the timing of the Federal Reserve’s next rate hike.

The market anticipates 2.5% GDP growth, according to a Thomson Reuter’s poll. This is an optimistic estimate given lackluster economic growth (0.5%-1.2%) in the last three quarters. Some analysts believe that US GDP looks to have rebounded as the second quarter real GDP growth came in surprisingly below expectation. That expectation has led to a higher expectation of a Dec rate hike and led the dollar index to a three-month high.

The S&P 500 index has traded in a well-defined technical range between 2,106-2,178 points over the last two months. Upside is limited by the current high valuation (over 20 times trailing P/E) whereas the downside is cushioned by solid corporate earnings. The market has found itself in a fragile balance, which could be broken by unexpected economic data or the upcoming election results.

OCBC Q3 profit rises 5%, beating estimates

Singapore’s second largest lender OCBC posted better-than-expected third quarter earnings, which is fueled by a 25% increase in its non-interest income and profit from life assurance. The group’s net profit rose 5% y-o-y to S$943 million, despite lower net interest income. OCBC set aside a higher allowance of S$166 million for loans and other assets, anticipating a more challenging environment for the oil & gas sectors. The company’s non-performing loans climbed up to 1.2%, from 0%.

Yet better earnings result failed to lift its share price. OCBC closed flat and the benchmark Straits Times Index was little moved on Thursday. This probably indicates that investors are still concerned about potential higher impairment charges for loans to the struggling oil & gas industry and slowdown in China. The other two banks, UOB and DBS will announce their earnings on Friday and the following Monday respectively.

US SPX 500 – Cash

market_28102016

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

Subscribe
Notify of
0 Comments
Inline Feedbacks
View all comments
You May Also Like

Trump elected president of United States; Stocks defy gravity

By Alan Furber, CMC Market Wall Street traded higher on Wednesday in…

When to use a personal loan for education in Singapore

By SingSaver.com.sg When a study loan is not applicable, Singaporeans can use a…

Can a family survive on S$2,000 per month? Singaporean online magazine faces criticism over oversimplified analysis

On Monday (13 Feb), Singapore online magazine Goody Feed published an article…

Finance Ministry “disappointed” with instances of officers from MCCY and PA allegedly fabricating or altering documents, following AGO’s report

The Auditor-General’s Office’s (AGO)’s latest findings on serious lapses involving officers from…