US equities surged to its highest level in more than a month last night as investors’ focus shifted away from trades to upcoming corporate earnings, which is expected to be another solid quarter.

Asian markets rebounded sharply on Monday and this positive momentum is likely to carry on today under favourable market sentiment.

Hang Seng Index found strong support at around 28,140 – a key 78.6% Fibonacci retracement level and since rebounded, as momentum indicator MACD, RSI and DMI suggested the market has been technically oversold. Shanghai Composite also rose 2.4% on Monday as investors took this window period to accumulate chips. Hang Seng Index and Shanghai Composite are trading at average trailing price-to-earning of 11.5 and 13.5 times respectively – the lowest level observed in more than two years.

Fundamental wise, the markets are not as expensive as they were before and this fact helps to cushion the downside. CSI 300 company earnings are expected to grow at a pace of 16% this year, according to Bloomberg. This is the fastest growth estimated in over six years. Recent stock market performance continues to diverge with earning estimates, which is unlikely to sustain for very long. Stretched market liquidity and worries about trade conflicts create an opportunity for investors to look for bargain deals.

In Singapore, the Straits Times Index rebounded sharply on Monday to 3,228.8 points, led by banks, telcos and property developers. Local investors quickly digested the news of property cooling measures and decided to move on. Singtel share price surged for a fourth day with aggregate gain of 8.6%, probably due to ‘dividend hunt’. The telco company is going to pay final dividend of $0.107 per share on ex-date 26 July.

Singtel

By Margaret Yang in Singapore

 

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