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

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 to stand above $40 again.  The US market finished higher as IBM delivered better-than-expected Q1 earnings.

Singapore’s earnings season will kick off this week. Local investors and traders will be watching the Q1 earnings results of the biggest local companies in the coming weeks for clues as to 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 and $1,260. A potential ‘head and shoulder’ pattern has formed, however, which warns of potential downside if the earnings season brings positive surprises that quench the demand for safe-haven assets.

FX The US Dollar Index has fallen for the third straight day, approaching a key support level at 94.00. A weaker USD sent other currencies higher, with AUD/USD trading at ten-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  

Earnings Calendar for Singapore blue chips

Company Name Date Period EPS Estimate CapitaLand Ltd 20/4/2016 Q1 2016 0.05 Singapore Exchange Ltd 20/4/2016 Q3 2016 0.085 Sembcorp Marine Ltd 27/4/2016 Q1 2016 0.021 United Overseas Bank Ltd 28/4/2016 Q1 2016 0.435 Oversea-Chinese Banking Corp Ltd 29/4/2016 Q1 2016 0.215 Jardine Cycle & Carriage Ltd 29/4/2016 Q1 2016 0.54 Yangzijiang Shipbuilding Holdings Ltd 29/4/2016 Q1 2016 0.15 DBS Group Holdings Ltd 03/05/2016 Q1 2016 0.42 Sembcorp Industries Ltd 04/05/2016 Q1 2016 0.058 StarHub Ltd 05/05/2016 Q1 2016 0.045 Ascendas Real Estate Investment Trust 05/05/2016 Y 2016 0.152 SIA Engineering Co Ltd 10/05/2016 Y 2016 0.162 Wilmar International Ltd 10/05/2016 Q1 2016 0.04 City Developments Ltd 11/05/2016 Q1 2016 0.14 Singapore Airlines Ltd 12/05/2016 Y 2016 0.669 UOL Group Ltd 12/05/2016 Q1 2016 0.115 Golden Agri-Resources Ltd 12/05/2016 Q1 2016  N.A. Genting Singapore PLC 13/05/2016 Q1 2016 0.008 Singapore Telecommunications Ltd 13/05/2016 Y 2016 0.243 Singapore Technologies Engineering Ltd 13/05/2016 Q1 2016 0.04 SATS Ltd 13/05/2016 Y 2016 0.202 ComfortDelGro Corp Ltd 13/05/2016 Q1 2016 0.031 Thai Beverage PCL 13/05/2016 Q1 2016 0.29 Global Logistic Properties Ltd 19/05/2016 Y 2016 0.048

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