Equities Weekly: Higher oil prices and Trump optimism buoy markets

Global equity markets ended the week higher as a rebound in crude oil prices lifted market sentiment, while optimism over Trump’s proposed policies to spur economic growth also buoyed markets, with the MSCI AC World Index advancing 2.58 per cent over the week ended November 25, 2016. The benchmark West Texas Intermediate crude oil rose 2.01 per cent to end the week at US$46.06 per barrel, while gold prices fell 0.82 per cent over the week. Amongst developed market equities, the US equity market, as represented by the S&P 500 Index, closed higher by 2.65 per cent, while the European equity market, as represented by the Stoxx 600 Index, recorded a gain of 2.17 per cent. Meanwhile, Japan’s Nikkei 225 Index edged higher by 1.31 per cent.

Asian and emerging market bourses also posted gains over the week, with the MSCI Asia ex Japan Index and the MSCI Emerging Markets Index rising 2.46 per cent and 2.54 per cent respectively. Over in East Asia, Taiwan, Hong Kong and Korea saw their respective equity indices gain 3.37, 2.93 and 1.42 per cent respectively. China’s equity markets also turned in a good performance, with the HSML 100 Index rising by 3.90 per cent, while its onshore equity market, as represented by the Shanghai Shenzhen CSI 300 Index and the Shanghai Composite Index, also gained 3.9 and 3.02 per cent respectively. In Southeast Asia, Thailand’s SET Index, Singapore’s Straits Times Index and Malaysia’s KLCI Index saw gains of 2.83, 1.74 and 0.21 per cent respectively over the week, while Indonesia’s JCI Index slid -1.13 per cent. In other emerging markets, Brazil’s Bovespa Index gained 2.96 per cent, while India’s SENSEX Index edged up by 1.14 per cent. Russia was the best performer amongst equity markets under our coverage, with the RTSI$ Index rising 4.02 per cent over the week.

Singapore: Growth forecast shaved amidst lukewarm 3Q16 GDP data, Consumer Prices Show Signs of Stabilisation

Singapore’s economy grew 1.1 per cent on a year-on-year basis in 3Q16 based on final estimates, down from a two per cent growth in the previous quarter. The latest set of data was better than market expectations for a one per cent year-on-year expansion, and was higher than the 0.6 per cent growth initially forecasted. On a quarter-on-quarter basis, the economy contracted by a seasonally-adjusted two per cent that was a sharp reversal from 2Q16’s 0.1 per cent growth, although the revised reading was higher than the advance estimate of a 4.1 per cent contraction. Economic growth in 3Q16 was supported by the goods producing industries, with manufacturing and construction growing by 1.3 per cent and 1.6 per cent respectively. The improvement in the goods producing industries, however, was offset by a weak performance in the important services producing industries, which registered flat growth in 3Q16. Against the current global economic backdrop, Singapore’s economy is expected to remain on a modest growth trajectory, with the government narrowing its GDP forecast to between one to 1.5 per cent for 2016, as compared to its earlier forecast of one to two per cent.

Singapore’s consumer price inflation in October 2016 came in at 0.1 per cent year-on-year, up from the 0.2 per cent decline in the previous month, and was below market expectations for flat growth in consumer prices. October’s inflation data reflected a slower decline in the cost of oil-related items, which declined by 3.7 per cent year-on-year, as compared to September’s 8.4 per cent drop, due to a moderation in the decline of electricity tariffs and petrol prices. Food and services inflation eased to 1.9 and 1.4 per cent, down from the previous month’s 2.2 and 1.5 per cent respectively. Meanwhile, the cost of accommodation remained on a downtrend, falling by 3.8 per cent year-on-year, as the housing rental market continued to soften in October.