The NASDAQ index broke a new record high on Monday, led by a strong rally from the world’s most valuable tech company, Apple, ahead of its Q1 earnings release.
Apple’s share price surged to US$146.5, up 2% from the previous day. This translated to a return of approximately 52% on Warren Buffett’s initial investment in Apple in Q1 2016, when its stock price fell to just above US$90. Berkshire Hathaway continued to overweigh Apple over the last two quarters, adding a total of 121.6 million shares (approx. 2.3% of outstanding shares) into its portfolio.
With political events settling somewhat, at least temporarily, the market focus now turns to corporate earnings season. So far, over 80% of the S&P 500 companies have announced positive surprises in their first-quarter earnings. In Singapore, blue chip companies including CapitaLand, UOB, Yangzijiang, and DBS have announced better-than-expected earnings as well.
DBS, Singapore’s largest lender, announced record net profits of S$1.21 billion in Q1, beating Bloomberg’s consensus of S$1.03 billion. Strong performance was attributed to a 26% increase in wealth management fees and investment banking fees. Net interest income stayed unchanged as higher loan volumes were offset by softer interest rates. Specific allowances eased from recent quarters as commodity prices – especially crude oil prices – recovered from their 2016 lows. Non-performing loan formation moderated across Singapore’s largest lenders, including UOB and DBS.
Technically, DBS’ share price has broken above the upper ceiling of an “ascending triangle” of S$19.40. The Fibonacci extension lines suggest that its next major resistance level can be found at around the S$20.77 area (100% Fibonacci extension level).
SGX trading volumes declined in 2015 and 2016 but have started to recover in the first quarter of 2017. A strong surge in trading volume was observed over the last four months, with revived global economic tailwinds and Trumponomics delivering a positive influence on the stock market. Singapore’s economy is benefiting from a cyclical uptrend, fuelled by a broad recovery in global trade. In spite of recent geopolitical headwinds, the fundamental elements will provide support for the equity markets and boost market confidence.
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