By Margaret Yang, CMC Markets
Last Friday’s US non-farm payroll numbers indicated an increase of 156k in the job market. This marked the longest streak of jobs gains in history – 75 months. Although it came below consensus forecasts of 178k, the revising-up of the previous two months’ data and higher wage gains helped to underpin market sentiment.
US stocks closed broadly higher, with the Dow Jones Industrial Average approaching psychological resistance of 20,000 again. This favourable sentiment is likely to spread over to Asian and European equity markets today.
Another month of solid job gains has led the market to believe that more rate hikes are on the table, thus sending the US dollar index higher. The dollar index rebound 0.78% to 102.16 this morning. Gold and silver, however, are under pressure.
China data and earnings season kicks in this week
This week, Chinese inflation and trade balance data are in the spotlight. These will probably give us more clues to the direction of the renminbi following huge volatility we saw last week. Fed chairwoman Yellen will give a speech on Friday morning. More volatility in the currency market can be expected if she takes a more hawkish tone towards future monetary policy.
In Singapore, 4th quarter earnings will kick in from Friday, starting with SPH. The Straits Times Index has rallied almost 3% during its first week trading in 2017, fuelled by strong 4Q GDP and a rebound in oil prices. The sustainability of this rally will depend on upcoming corporate earnings reports. If earnings are good, we will probably see the Straits Times Index challenging 3,000 points soon.
US Dollar Index
Margaret Yang Yan, CFA, is a market analyst for CMC Markets Singapore.