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Market Snapshot
Tuesday, 14 October 2014
Wall Street Sings the Blues over Opaque Rates Date
WHAT’S NEWS

US stocks extended losses as investors struggled to digest what delays in
rate hikes may mean.

China exports grow 15.3% on-year in September, the fastest in 19 months.
Imports also expand better-than-expected at 7%.

Singapore 3Q-14 GDP comes in below expectations.

Monetary Authority of Singapore keeps policy rate unchanged.
EQUITY MARKETS
S&P 500
DJ Euro Stoxx 600
India wholesale inflation may grow 3.3% on-year in September.

Euro area industrial output may decline 1.6% on-month.
0.0%
Nikkei-225
THE DAY AHEAD

-1.6%
MSCI Asia ex-Japan
0.0%
-0.6%
0.2%
MSCI Emerging Markets
DEVELOPED MARKET EQUITIES
Stocks Open to a Gloomy Monday
US equities opened the week on a weak note, as investors stayed on the
sidelines to digest what delays in rate hikes may mean. Federal Reserve Vice
Chairman Stanley Fischer said over the weekend that the central bank may
remove accommodative interest rates at a slower pace if foreign growth is weaker
than anticipated. Chicago Fed President Charles Evans said central bankers
should be “exceptionally patient” in adjusting policy. The Nasdaq fell 1.5% and the
Dow slipped 1.4% to close at a six-month low. The S&P 500 slid 1.6% to end
below its 200-day moving average for the first time since 2012.
Shown in local currency terms, as of the last business day.
US TREASURY YIELD CURVE
4.0%
5.0%
3.0%
4.0%
2.0%
3.0%
Medical and biotech plays bucked the trend, gaining on news that the US
diagnosed another Ebola-positive patient on its soil. Hazmat suit maker Lakeland
Industries and face mask maker Alpha Pro Tech led gains for the day. Airline
stocks moved in the other direction on growing fears of an Ebola outbreak in the
US. Still on the corporate front, investors are keeping a lookout for key earnings
results this week. JPMorgan Chase, Citigroup, Bank of America, GE, and Google
are among those releasing third quarter results.
2.0%
1.0%
1.0%
1M
1M
3M
3M
6M
6M
0.0%
1YR 2YR 3YR 5YR 7YR 10YR 30YR 0.0%
1YR 2YR 3YR 5YR 7YR 10YR 30YR
One year ago
Last Close
Europe stocks ended flat after a rally in airline plays helped to limit earlier losses.
Air France-KLM and Lufthansa jumped on expectations that weaker Brent crude
may translate to weaker fuel costs. Fuel costs typically account for around a third
of an airline’s operating expenses. Separately, Fiat Chrysler (+1.2%) led gains in
Italy after the carmaker saw a strong US debut on the New York Stock Exchange.
The curve shows the yield to maturity of current US bills, notes and bonds. All data is as
of the close of the last business day.
Japan’s Nikkei was closed for a public holiday and will reopen today. Early this
morning, the Bank of Japan reported producer prices eased 0.1% on-month in
September, in line with forecasts. On an on-year basis, the figure rose 3.5%, shy
of estimates for a 3.6% print.
CALENDAR
Event
Period
Survey
Prior
IN
Wholesale Prices (YoY)
Sep
3.30%
3.74%
CH
Foreign Direct Investment (YoY)
Sep
-14.0%
14.0%
UK
CPI (YoY)
Sep
--
1.50%
GE
ZEW Survey Expectations
Oct
--
6.9
EZ
Industrial Production (MoM, sa)
Aug
-1.60%
1.00%
Source: Bloomberg, DBS Group Research
Market Snapshot 14 October 2014
ASIA EQUITIES
China September Exports at the Fastest in 19 Months
China’s SHCOMP ticked 0.4% lower as upbeat September trade data dampened
expectations for more stimulus. Exports grew 15.3% on-year, the fastest in 19
months, on stronger demand from the US. Imports also expanded 7%, far above
forecasts for a 2.7% decline, on better iron ore and crude oil demand. The
resulting trade surplus narrowed to USD31 billion, down from August’s USD49.8
billion.
Hong Kong’s Hang Seng gained 0.2% despite signs of worsening tensions in the
city-state. Taxi and truck drivers tried to break through the barricades built by the
demonstrators, saying the three-week long protests are taking a toll on business.
Meanwhile, Hong Kong police said that they will “soon” remove barricades from
two key areas: Queensway, a major entry point into the central business district,
and Causeway, a popular shopping area.
Singapore GDP grew 2.4% on-year in 3Q-14, missing forecasts for a 2.8%
reading. Separately, the Monetary Authority of Singapore kept its monetary policy
unchanged and commented that the nation’s economy “should expand at a
moderate pace in the quarters ahead”. The central bank also lowered its core
inflation estimates to a range of 2% to 2.25% from 2% to 3% earlier.
India’s Sensex rose 0.3% on bargain-hunting after recent weakness. On the data
front, consumer inflation eased for two straight months to 6.46% on-year in
September. Cheaper food was the reason for the fall. Inflation did not expand as
fast as analysts thought, and was at its weakest since January 2012, giving plenty
of room for the central bank to breathe.
FIXED INCOME
The German bund rose on higher safe-haven demand after Standard and Poor’s
Rating Services slashed France’s credit rating outlook and downgraded Finland’s
rating to AA-plus from AAA. US Treasury markets were closed for a holiday.
COMMODITIES
WTI crude was slightly lower, recovering from sharp losses earlier in the day after
China released upbeat trade figures for September. Focus for today will be on the
stockpiles report from industry group American Petroleum Institute.
Gold gained after weak US equities renewed the bullion’s safe-haven appeal.
Separately, Singapore became the latest Asian nation to start exchange-traded
contracts after the country launched a 25 kilogram gold contract on Monday.
These contracts are usually used to provide a regional benchmark price for the
precious metal.
2
Equity Markets
Returns of equity indexes around the world, in local currency terms.
Index
Close
Overnight
YTD
DJIA
16321.07
-1.35%
-1.54%
S&P 500
1874.74
-1.65%
1.43%
NASDAQ
4213.66
-1.46%
0.89%
Europe
Euro Stoxx 600
321.56
-0.02%
-2.04%
Germany
DAX
8812.43
0.27%
-7.74%
France
CAC-40
4078.70
0.12%
-5.06%
UK
FTSE100
6366.24
0.41%
-5.67%
Asia
MSCI AxJ
554.45
-0.64%
0.54%
Japan
Nikkei-225
15300.55
0.00%
-6.08%
China
SHCOMP
2366.01
-0.36%
11.82%
Hong Kong
Hang Seng
23143.38
0.24%
-0.70%
Taiwan
TWSE
8711.39
-2.84%
1.16%
South Korea
Kospi
1927.21
-0.71%
-4.18%
Indonesia
JCI
4913.05
-1.01%
14.95%
Malaysia
KLCI
1797.20
-0.65%
-3.74%
Singapore
STI
3202.15
-0.67%
1.10%
India
Sensex
26384.07
0.33%
24.63%
Emerg. Mkt
MSCI EM
991.49
0.16%
-1.12%
US
Government Bonds
Benchmark yields of major 10-year government bonds.
Latest yield
Previous yield
Change (bps)
US
2.28%
2.28%
0.00
Germany
0.90%
0.89%
0.80
Japan
0.51%
0.51%
0.00
China
4.03%
4.04%
-1.00
-2.40
Taiwan
1.67%
1.69%
South Korea
2.82%
2.82%
0.30
Indonesia
8.38%
8.39%
-0.80
Singapore
2.27%
2.32%
-5.00
India
8.42%
8.46%
-3.50
Commodity futures
Prices of one-month futures contracts, grouped by commodity type.
Close
1-day change
1-yr high
1-yr low
85.74
-0.09%
107.73
83.59
Gold ($/oz.)
1229.30
0.68%
1392.60
1181.40
Copper ($/ton)
6743.00
1.03%
7373.00
6407.00
Corn (cents/bu.)
346.00
3.59%
519.50
318.25
Soybean (cents/bu.)
945.25
2.47%
1536.75
904.00
Wheat (cents/bu.)
505.25
1.35%
735.00
466.25
Coffee (cents/lb)
218.10
-1.04%
225.50
114.20
Sugar (cents/lb)
424.30
0.45%
516.90
406.50
WTI crude ($/bbl)
Source: Bloomberg, as at the close of the last business day.
YTD refers to year-to-date returns.
Market Snapshot 14 October 2014
3
CURRENCIES
The AUD jumped after China posted upbeat trade data. Exports grew 15.3% onyear, the fastest in 19 months, on stronger demand from the US. Imports also
expanded 7%, far above forecasts for a 2.7% decline, on better iron ore and
crude oil demand. China is Australia’s largest trading partner.
The Brazilian real rose after opinion polls suggested Aecio Neves may become
president in elections later this month. A Sensus poll showed that Mr. Neves may
secure 52.4% in the election, compared to incumbent Dilma Rousseff’s 36.7%.
The BRL also gained after Marina Silva, a crowd favourite who only secured third
place in the first round, endorsed Mr. Neves.
Source: Bloomberg, DBS Group Research and Vickers (DBS), Dow Jones
Newswires, Reuters, Agence France-Presse
FX Round-up
Currencies as of New York close.
Last
Overnight change
Day high
Day low
EUR/USD
1.2687
0.47%
1.2698
1.2620
GBP/USD
1.6098
0.14%
1.6127
1.6062
USD/JPY
107.3700
-0.27%
107.62
107.06
AUD/USD
0.8756
0.81%
0.8765
0.8652
NZD/USD
0.7877
0.79%
0.7888
0.7795
USD/CAD
1.1202
0.03%
1.1220
1.1170
USD/SGD
1.2710
-0.43%
1.2766
1.2705
AUD/SGD
1.1129
0.35%
1.1139
1.1026
NZD/SGD
1.0011
0.32%
1.0027
0.9936
GBP/SGD
2.0461
-0.32%
2.0534
2.0438
EUR/SGD
1.6125
0.02%
1.6154
1.6080
EUR/AUD
1.4489
-0.34%
1.4614
1.4475
AUD/NZD
1.1116
0.02%
1.1146
1.1065
USD/INR
61.1050
-0.37%
61.3000
61.0938
XAU/USD
1226
0.20%
1237.9
1217
GBP/USD
NZD/USD
USD/JPY
Source: Bloomberg.
SGD Against Major Currencies
USD/SGD
GBP/SGD
104
102
USD Against Major Currencies
AUD/SGD
EUR/SGD
NZD/SGD
110
100
105
98
100
96
95
EUR/USD
AUD/USD
94
90
92
90
Apr-14 May-14
Jun-14
Jul-14
Aug-14 Sep-14
Oct-14
85
Apr-14 May-14
Jun-14
Jul-14
Aug-14 Sep-14
Oct-14
Source: Bloomberg.
Technical Summary
Short-term technical readings with a two-week horizon. All figures are as of the last business day.
Currency
Short term Direction
Support 1
Support 2
Resistance 1
Resistance 2
EUR/USD
GBP/USD
Bearish
Bearish
1.2604
1.5941
1.2502
1.5852
1.2900
1.6226
1.2994
1.6414
USD/JPY
AUD/USD
Range
Bearish
106.65
0.8649
105.55
0.8315
108.15
0.8805
109.23
0.8898
NZD/USD
USD/CAD
Bearish
Range
0.7792
1.1120
0.7707
1.1035
0.7974
1.1269
0.8078
1.1450
USD/SGD
AUD/SGD
Bullish
Bearish
1.2670
1.1053
1.2575
1.0820
1.2767
1.1195
1.2825
1.1285
NZD/SGD
GBP/SGD
Bearish
Range
0.9926
2.0392
0.9816
2.0183
1.0113
2.0609
1.0245
2.0812
EUR/SGD
EUR/AUD
Bearish
Bullish
1.6058
1.4450
1.5829
1.4285
1.6254
1.4620
1.6414
1.4800
AUD/NZD
USD/INR
XAU/USD
Range
Range
1.1060
60.84
1.0915
60.30
1.1192
61.52
1.1294
61.93
Range
1217
1204
1241
1258
Source: DBS CIO Office.
Market Snapshot 14 October 2014
4
Insights Feature
Euro Zone: Soggy Growth Could Turn Austerity into Lip Service
Euro zone growth concerns were revived by weak German exports data,
which contracted 5.8% on-month in August from 4.8% the month before.
Though a one-off fall in auto sector output was probably the reason for the set
of sobering production numbers, risks to the Euro zone’s 3Q-14 GDP growth
are clearly on the downside.
This led European Central Bank (ECB) chief Mario Draghi to allay worries of
rising growth risks last week. He also assured those present that the ECB’s
brand of loose monetary policy will be able to lift inflation off recent lows, and
that balance sheet expansion plans will remain on course. He also reiterated
the need for fiscal policies to return to a growth-supportive mode.
Germany’s resistance to an accommodative fiscal stance might weaken in
coming weeks, with growth risks plaguing the core member countries. Four
prominent domestic think-tanks have lowered Germany’s growth forecasts to
1.3% in 2014 and 1.2% in 2015. This compares to previous estimates of 1.9%
and 2.0% respectively.
For its part, the ECB has begun private-sector asset purchases, with details
on asset-backed securities and covered bonds due later this month. Clearly,
monetary policy and stimulus are insufficient to boost growth and inflation
expectations, especially if fiscal policy is moving in the other direction –
austerity. Hence, as the challenges to growth mount, we expect some
softening in the fiscal austerity stance sooner rather than later.
German Exports Plunged in August
6
4
2
0
-2
-4
-6
-8
Oct-10
May-11
Dec-11
Jul-12
Feb-13
Sep-13
Apr-14
Source: Bloomberg, as of 13 October 2014
Source report: DBS Group Research. Daily Breakfast Spread. 10 October 2014.
Summarised by DBS Group Wealth Management /CIO Office.
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