Recap of the week
A scan of the week-to-date changes for major indices in the US and Asian region finds a majority in red. One would recall that the week started on a positive note, boosted by the jump in crude oil prices after Saudi Arabia and Russia backed an extension of the current output curb to nine months. WTI futures shot up to a two week high on Monday while equity markets received a boost as well.
The attention midweek had however been captured by the probe into President Donald Trump’s ties with Russia which unleashed jitters into the markets. Concerns with regards to the impact on President Donald Trump and the development in his pro-growth policies saw the likes of the S&P 500 and Dow Jones printing the worst 1-day percentage fall seen since September 2016. Despite the rebound on Thursday, Asian markets thrived in mixed performances into the end of the week with cautiousness prevailing ahead of the eventful week ahead.
Pivoting some attention back to economic fundamentals in the week ahead could be 2 May’s Federal Open Market Committee (FOMC) meeting minutes and the second reading of US Q1 GDP. May FOMC’s post-meeting statement had highlighted the Fed’s view that the bout of weak data had been ‘transitory’ and further details to be released in the minutes may shed light on the Fed’s readiness to take-off in the upcoming June meeting.
Potentially providing another boost for US markets could be the update to US Q1 GDP. Bloomberg’s current market consensus points to a 0.2% quarter-on-quarter (QoQ) annualised uptick to the 0.7% QoQ first reading. Surprises on the upside could certainly help to strengthen the battered US dollar in next week’s trades.
Thursday will also see the OPEC meeting unfold with the market widely expecting a nine-month extension to the current output curb, following Saudi Arabia and Russia’s announcement on Monday. US output update had provided some support for crude oil this week, but the main focus for the market lies with the OPEC meeting next week. As things stand, OPEC members have been broadly supportive in their rhetoric to extend supply cuts and the bias certainly looks to be on the upside for crude oil. WTI futures was last seen pushing at the $50 per barrel (bbl) mark as of 4:45pm Singapore time and could find $51.50/bbl being a key resistance for prices in the climb.
The upcoming week will find central bank meetings in both Thailand and South Korea. Although no change in monetary policy is expected. First quarter GDP reading will also be expected from Taiwan and Singapore while inflation updates from Japan and Singapore are items to watch for.
For the Singapore STI, the pressure had been apparent following the dip in US markets. The final reading for Q1 GDP is currently expected at 2.7% year-on-year (YoY), up from the 2.5% YoY and this positive outlook could help to support the local bourse in the upcoming week. This is in addition to further upsides that could be derived from any gains in crude oil prices. Good support for the STI can be found around 3200 levels.