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In turn, the equity market saw mixed pressure that kept major indices in a tighter range. Looking into the new week, there would be little doubts that geopolitics will remain front and centre, though it would also be a data-packed week to keep us busy as we move into June.
From a data perspective, the week does not really begin until Wednesday with onshore markets in the US, UK and Germany away on a light Monday while several south-east Asian economies including Singapore, Malaysia, Thailand and Indonesia take Tuesday off. That being said, the week then heats up with a slew of releases ahead of the US non-farm payrolls highlight.
Next Friday’s payrolls update would be the final reading prior to the 12-13 June Federal Open Market Committee (FOMC) meeting where the Fed is expected to both hike rates and update their economic and rate hike projections. Compared to previous months, a softer but nevertheless steady number had been penned in by analysts at 175k, a slight improvement from April’s 168k. Meanwhile, unemployment is expected to remain steady at the lowest level since 2000 of 3.9% just as the average hourly earnings is likely to tick up to 0.2% month-on-month (MoM). Whereupon realised, the figures would prove to be strong interpretations for central bank watchers. Another key release for the coming week would also be the US ISM manufacturing index which is due to improve to 57.7 that would altogether be US dollar bullish in the coming week. Certainly we have had the Fed leaning towards the dovish end in the latest May minutes, but data had remained persistently strong since and that could have a sway upon the markets should we get a continuation of the trend in next week’s key releases. One to watch to re-ignite any USD run.
Prior to the abovementioned items, the US economic calendar would also be packed with the likes of May’s conference board consumer confidence data, the second reading of US’ Q1 GDP and April’s core PCE numbers. All three data points are expected to slowdown from the previous readings, though they might take a backseat in driving markets compared to the labour market readings.
While the Fed offered relief this week, most Asian markets look to conclude the week in losses, largely impacted by the cooking up of the geopolitical storm in the week. Both the US-China and US-North Korean issues appear to have landed in a stalemate situation, or more affectionately known as a truce for the former. By no means are we expecting the back-and-forth to miraculously halt in the near term, but while keeping an eye, we can also expect economic indicators to return to guide the regional markets next week with key releases from China and Japan among others.
The start of the month brings forth the slew of PMI readings, starting with official PMI readings on Thursday. This will be followed by China’s May Caixin manufacturing PMI release on Friday. April’s manufacturing numbers saw a divergence between the two gauge with particular worries over export orders in the Caixin reading that could remain one to debate in light of the trade differences that persists, ones to follow next week for its impact on Asian markets. Simultaneously, Japan updates unemployment, consumer confidence and industrial production.
With the whirlwind this week, key markets in the region including the likes of the Nikkei 225, HSI and STI can be seen caught in consolidation, certainly still hunting for direction with the jam-packed week of tier-1 releases ahead. Immediate support and resistance seen at around 3509 and 3550 for the STI into the new week.