After a volatile week on re-ignited trade fictions, investors’ focus is likely to return to the fundamental side as US earnings kicked off on strong bank profits as the US economy continued to improve, with the Fed maintaining its interest rate targets.

Despite rising uncertainties on the trade and foreign policies, the fundamental elements are underpinning the rally of US stocks.

The S&P 500 index climbed to its highest level since March and technical aspect has formed an ascending channel in which the index was perfectly bounded in. Momentum indicator RSI, however, has shown signs of being overbought but this bull trend has not exhausted yet.

China will report its second quarter GDP number today and market expects a slower pace of growth – 6.7% versus 6.8% in the previous quarter – due to the ongoing deleveraging campaign as well as weaker exports. Investors will also keep an eye on other key data including Urban Investment Activity Indicator, Industrial Production and Retail Sale, to paint a clearer picture of China’s economic outlook.

Chinese technology giant Xiaomi debuted in HKEX below water but quickly recovered losses and finished its first week with a decent 26% gain – pushing its market cap to HK$480 billion (or US$61.6 billion). The rally was largely due to its inclusion in the Hang Seng Composite Index which helped to draw passive inflows. Challenges remain for the company’s performance due to intensified competition in smartphone market and thin margin.

Singapore food court operator Koufu has closed booking today and will debut on SGX on 19 July 2018. Based on its full year result in 2017, the company is priced at around 13 times trailing price to earnings – a discount valuation compared to peers like Kimly (18 times) and BreadTalk Group (53 times). The revenue growth, however, has slowed down in the year 2016/17 and the outlook of its overseas expansion remains unclear.

US SPX 500 - Cash

Market Calendar

By Margaret Yang in Singapore

 

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