US equity markets soared on Tuesday, as strong new home sales in April beat market expectations.
The new home sales figure is a leading indicator of the overall economic health of the US. The sale of a new home starts an economic ripple effect – a mortgage is sold by the bank, the transaction must be brokered and new appliances and furniture must be bought for the home. And this process creates more employment opportunities.
The S&P 500 index rose 1.4% and the Nasdaq jumped 2%. Strong data led the market to believe that the economy is probably strong enough to withstand the impact of another rate hike this year. The positive sentiment is likely to spread over to Asian markets today.
Singapore’s Q1 GDP grew at 1.8% according to the Ministry of Trade and Industry (MTI) this morning. The reading is generally in line with market expectations. The manufacturing sector contracted by 1.0% mainly due to weak performance in the offshore and marine sectors, and the oil and gas industry. On the other hand, growth has been picking up in the construction, IT and information, finance and insurance sectors, and other service sectors on a year-on-year basis. USD/SGD was little changed around the 1.3810 level area today.
The Dollar Index climbed higher last night due to stronger US new homes sales data. USD/JPY has rebounded to the 110.00 area this morning. The immediate support and resistance levels for USD/JPY are 111.00 and 108.30 respectively. EUR/USD has broken down through key support at the 1.1200 area, and this will probably indicate further downside towards the 1.1080 area.
Crude oil prices rebounded last night, as analysts expected a drop in US DoE crude inventory numbers tonight. A Reuter’s poll suggested that crude stocks may fall by 2.5 million barrels as compared to a week ago. WTI crude oil futures opened at $49.09 today and climbed to the $49.20 area this morning. A stronger US dollar continued to extend pressure on commodity prices, as gold and silver both slid further on Tuesday.
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