The trio of key events, the ECB meeting, testimony by US former FBI director and UK general election had arguably all delivered unexpected results. Capturing the market’s attention on Friday had primarily been the UK election. The absence of a majority for Prime Minister Theresa May’s Conservative party sent the sterling plummeting. Despite the debate on the impact upon Brexit negotiations and the UK economy from the latest election results, the UK market looked to the short-term boost from the weaker currency and gained in Friday’s session.
Meanwhile, the US market appear to have lost some of its buoyancy with a tech sell-off shaving recent gains for US indices, despite the relatively smooth passage of the testimony from former FBI director James Comey. The IT sector saw a steep 2.74% slide on the comprehensive S&P 500 index after warnings from brokers on the high valuations. Comparatively, the Dow Jones went on to notch a fresh all-time high with rotations into other sectors including energy and financial stocks.
The blend of leads from the past week is likely to set markets continuing the trend of mixed performances at the start of the week. Central bank meetings in both the US and UK would be items to look out for this week especially for guidance on the outlook of the respective economies. Specifically, the Federal Open Market Committee (FOMC) meeting will likely be the most watched meeting with their update on the summary of economic projections and the ‘dot plot’, featuring the committee’s view on the future rate hike path. The current disparate view from the market could potentially sway the pessimistic market should strong a rhetoric be pushed through by the Fed.
Opening calls for Asian markets point to mixed performances for the key Hong Kong and Singapore market. Amid the mixed performance for Asian markets, both the Hong Kong and Singapore bourses had been seen with positive performance in the past 5-session period as regional counterparts including the Taiwan and South Korean markets retreated. Besides global leads, Asian markets will likely find China’s midweek industrial production and fixed asset investment updates the key in adjusting sentiment for the region.
For the day ahead, data releases including Singapore’s retail sales, Japan’s machine tool orders and India’s inflation would be expected. The market would also be keenly watching for an update of China’s loan conditions, due any time between 12-15 June.
Friday: S&P 500 -0.08%; DJIA +0.42%; DAX +0.80%; FTSE +1.04%