Market Snapshot
Tuesday, 21 March 2017
Global Markets Mixed on Investor Caution
THE DAY AHEAD



The UK announces a slew of February data including: core inflation
rate, public sector net borrowing, inflation rate, producer price index
(PPI) input and output.
Canada releases January’s retail sales numbers.
The US posts 4Q-2016 current account data.
EQUITY MARKETS
Shown in local currency terms.
S&P 500
-0.2%
DJ Euro Stoxx 600
-0.2%
OVERVIEW





US stocks fall on spike in Treasury prices. The day’s trading volume is
the lowest of 2017.
European equities end little changed as oil-and-gas companies and
lenders weighed down the Stoxx 600 index.
Asian stocks end mixed; but Hong Kong markets hit new highs on
earning reports optimism
Oil falls amid concerns that OPEC’s market rebalancing efforts could be
undermined by Libya, US producers.
The dollar rises after three previous sessions of declines, but pound falls
as Theresa May sets Brexit trigger day.
Nikkei-225
0.0%
0.5%
MSCI Asia ex-Japan
0.7%
MSCI Emerging Markets
US TREASURY YIELD CURVE
Shows the yield to maturity of current US bills, notes, and bonds.
DEVELOPED MARKET EQUITIES
4.0%
5.0%
US
3.0%
4.0%
US stocks fell for the fourth time in five sessions as bonds strengthened and
shares of financial companies declined. Volume on US exchanges was the
lowest of 2017.
The S&P 500 lost 0.20% to 2,373.47. The equity benchmark on Friday
notched its seventh weekly advance in eight after the Federal Reserve raised
rates last Wednesday and left its forecast for further increases this year
unchanged. The Dow Jones Industrial Average lost 0.04% to 20,905.86.
The Nasdaq Composite briefly touched an intraday record before closing
almost unchanged.
Financial stocks were down 0.9% as the 10-year Treasury yield lost 4.0 bps.
Seven of 11 sectors finished lower; utility shares were down 0.68%; real
estate stocks added 0.13%. Energy shares closed down 0.12% on lower oil
prices as an increase in US drilling diminished the prospect of the
Organization of the Petroleum Exporting Countries (OPEC) extending an
output-reduction deal.
Investors will assess reports due this week on housing, durable goods and
manufacturing for confirmation that the economy remains robust. The Fed
last week said it intends to keep monetary policy accommodative for some
time. Traders are now pricing in a 53.5% chance of another rate increase in
June, Fed Fund futures show. – Bloomberg News.
EUROPE
European stocks ended the session little changed after three days of gains,
weighed down by declines in oil-and-gas shares and lenders.
The Stoxx Europe 600 Index fell 0.17% to 377.68. Energy firms posted the
biggest losses, falling for the first time in four days and tracking crude prices
lower. Deutsche Bank AG fell 3.72% to the lowest this year after saying it
3.0%
2.0%
2.0%
1.0%
1.0%
0.0%
1M
1M
3M
3M
6M
6M
1YR 2YR 3YR 5YR 7YR 10YR 30YR
0.0%
1YR 2YR 3YR 5YR 7YR 10YR 30YR
One year ago
Last Close
Source: DBS CIO Office, Bloomberg, as of the last business day.
Visit the Markets Movers page for more insights:
Market Snapshot 21 March 2017
will raise EUR8 billion by selling stock at a 35% discount to last week’s
closing price.
Among other shares active on corporate news, Hansteen Holdings Plc rose
0.99% after gaining as much as 7% earlier as a Blackstone Group LP and
M7 Real Estate Ltd venture agreed to acquire its continental European
properties. – Bloomberg News.
2
Equity Markets
Returns of equity indices around the world, in local currency terms.
Index
US
Close
Overnight
YTD
DJIA
20905.86
-0.04%
5.78%
S&P 500
2373.47
-0.20%
6.01%
NASDAQ
5901.53
0.01%
9.63%
377.68
-0.17%
4.50%
Separately, UK Prime Minister Theresa May will trigger Article 50 to kick
start Brexit on 29 March, which will begin a two-year process for Britain to
leave the European Union.
Europe
Euro Stoxx 600
Germany
DAX
12052.90
-0.35%
4.98%
JAPAN
France
CAC-40
5012.16
-0.34%
3.08%
Shares in Tokyo slid at the open on Tuesday, extending last Friday’s losses.
The benchmark Nikkei 225 index was down 0.57% to 19,410.41 and the
Topix index was 0.36% lower at 1,560.22. Japanese markets were closed
on Monday for the Vernal Equinox Day holiday.
UK
FTSE100
7429.81
0.07%
4.02%
Asia
MSCI AxJ
585.96
0.50%
13.92%
Japan
Nikkei-225
19521.59
0.00%
2.13%
ASIAN EQUITIES
China
SHCOMP
3250.81
0.41%
4.74%
Hong Kong
Hang Seng
24501.99
0.79%
11.37%
Taiwan
TWSE
9912.97
0.04%
7.13%
South Korea
Kospi
2157.01
-0.35%
6.44%
Indonesia
JCI
5533.99
-0.12%
4.48%
Malaysia
KLCI
1749.41
0.24%
6.56%
Singapore
STI
3165.70
-0.12%
9.89%
India
Sensex
29518.74
-0.44%
10.86%
972.35
0.70%
12.77%
CHINA
China stocks swung between gains and losses on Monday as worries over
the new government-imposed property curbs prevailed. At Monday’s
closing, the Shanghai Composite Index added 0.41% to 3,250.808
bolstered by the energy sector. The Shenzhen Composite Index ended
higher, rising 0.31% to 2,036.053. The blue-chip CSI 300 Index rose 0.11%
to 3,449.61.
Real estate was the biggest decliner, slipping 0.57%. The heavyweight
financials sector also weighed down the main index, shedding 0.17%
during the day. Among other segments, consumer staples, health care and
utilities lost 0.97%, 0.79%, and 0.71%, respectively, following the 1.45%
decrease in unclassified stocks.
Tightening home-purchase curbs in a handful of cities including Beijing and
Guangzhou over the weekend may already be biting. About 30% of
customers at one agency in Beijing may default on purchase contracts as
the down-payment ratio increases for some buyers, according to the China
Securities Journal. – Bloomberg News.
HONG KONG
Hong Kong’s Hang Seng Index extended gains on Monday, rising 0.79% to
close at 24,501.99 after the China Shenhua Energy Co surged following the
announcement of a special dividend. The Hang Seng Index closed at its
highest level since August 2015. The Hang Seng China Enterprises Index
advanced 0.67% to 10,583.98, its highest closing level since November
2015, as automakers and insurers gained, according to Bloomberg.
China Shenhua Energy Co, the biggest coal miner in the world’s largest
producer, surged the most since 2008 after rewarding investors with a
special dividend as it posted its first profit growth in four years. Its shares
traded in Hong Kong advanced more than 20%, gaining most since
October 2008, before closing 16.28% higher. The company proposed a
final dividend of CNY0.46 per share for 2016, as well as a special dividend
of CNY2.51 per share, it said in a statement earlier.
REST OF ASIA
Australia’s benchmark index S&P/ASX 200 extended losses on Tuesday early
morning, shedding 0.18% to 5768.30. The index lost 0.36% to close at
5,778.91 on Monday. All industries slumped during the day’s trading
session except for health care and industrials, which rose 0.85% and
0.04%, respectively. Telecommunication services shares led losses with a
2.03% fall, followed by real estate stocks which were down 1.11%.
Financials, the most heavily-weighted segment on the index, slumped
0.32%. Westpac Banking Corp lost 0.26%, Australia & New Zealand
Banking Group retreated 0.54%, and Commonwealth Bank of Australia
slipped 0.40%.
India’s Adani Group plans to begin extracting coal from the USD16.5 billion
Carmichael project in Australia in 2020 after environmental protests delayed
the first phase of the mine. The company will begin work on the project
three months after it gets final approval from Australia’s federal
government, according to the chairman of the group. Adani expects
Emerg. Mkt MSCI EM
Government Bonds
Benchmark yields of major 10-year government bonds.
Latest yield
Previous yield
Change (bps)
US
2.46%
2.50%
-3.98
Germany
0.44%
0.44%
0.50
Japan
0.08%
0.08%
0.00
China
3.33%
3.32%
1.00
-2.85
Taiwan
1.11%
1.14%
South Korea
2.19%
2.17%
2.50
Indonesia
7.14%
7.22%
-8.40
Singapore
2.27%
2.32%
-5.10
India
6.89%
6.86%
3.00
Commodity futures
Prices of one-month futures contracts, grouped by commodity type.
WTI crude ($/bbl)
Close
1-day
change
1-yr
high
1-yr
low
48.22
-1.15%
55.24
35.24
Gold ($/oz.)
1234.00
0.31%
1377.50
1123.90
Copper ($/ton)
5869.00
-1.00%
6147.20
4625.50
Corn (cents/bu.)
363.50
-1.09%
439.25
301.00
Soybean (cents/bu.)
999.50
-0.05%
1208.50
892.25
Wheat (cents/bu.)
430.25
-1.38%
524.00
359.50
Coffee (cents/lb)
145.25
2.25%
181.65
127.70
Sugar (cents/lb)
495.70
-2.71%
608.40
414.20
Source: Bloomberg, as at the close of the last business day.
YTD refers to year-to-date returns.
Market Snapshot 21 March 2017
permission from Malcolm Turnbull’s government for the project in
Queensland’s Galilee Basin as early as May, with a final investment decision
by May or June. – Bloomberg News.
South Korea’s Kospi index opened 0.28% higher on Tuesday morning to
2163.22. On Monday, it reversed the uptrend, shedding 0.35% to close at
2,157.01. The electricity and gas sector posted an increase of 2.32% while
transport equipment and communication shares gained 1.21% and 1.00%,
respectively. Medical and precision machines underperformed, losing 1.95%
on Monday. Large cap Samsung Electronics Co lost 1.18% while major
chipmaker SK Hynix Inc added 1.82%.
The Seoul Central District Court is scheduled to begin the trial proceeding of
criminal charges against Lotte Group founder Shin Kyuk-ho and his three
oldest children on Monday afternoon. Shin Kyuk-ho and Shin Young-ja face
charges of tax evasion, embezzlement and breach of fiduciary duty, while
Shin Dong-bin is under indictment for embezzlement and fiduciary breach.
Shin Dong-joo faces one count of embezzlement. – Bloomberg News.
The Taiwan Stock Exchange Weighted Index (Taiex) added 0.04% on
Monday to 9,192.97. The marginal increase came after two consecutive
sessions of gains towards the end of last week. The performances of the 11
industry groups were mixed. Telecommunication services, energy and
materials gained 0.78%, 0.47%, and 0.07%, respectively; while industrials,
consumer staples and consumer discretionary posted losses at 0.32%,
0.26% and 0.22%, respectively.
FIXED INCOME
Treasuries advanced as Federal Reserve Bank of Chicago President Charles
Evans addressed the timing for further tightening. Evans suggested two or
three hikes might be warranted this year, if economic data remains robust.
The Fed last week raised interest rates and signalled it anticipated another
two increases by the year’s end. Yields on 10-year Treasury notes fell 4.0
bps to 2.4607%, the lowest since 1 March. The two- and 30-year Treasury
yields fell 2.6 bps to 1,2883 and 3.3 bps to 3.0770, respectively.
There is a torrent of Fed speakers this week, headlined by Chairwoman
Janet Yellen on 23 March. Yields fell with the dollar last week after the
Federal Reserve delivered a more dovish message than expected, even as it
raised interest rates. – Bloomberg News.
The rate on 10-year German bunds rose 0.6 bps to 0.438%, while that of
similar maturity UK gilts slipped 1.0 bps to 1.234%
3
COMMODITIES
Oil fell as a Libyan port is set to resume shipments and the US drilling
revival undermines the potential for Organization of the Petroleum
Exporting Countries (OPEC) output curbs to rebalance the market.
West Texas Intermediate (WTI) crude slid 1.15% to settle at USD48.22
a barrel. It has dropped 11% this month, heading for the steepest
one-month slide since July. Brent crude oil slipped 0.27% to
USD51.62 per barrel.
Saudi Arabian Energy Minister Khalid Al-Falih said on 16 March that
the kingdom may extend its cuts if supplies stay above the five-year
average. A day later, though, data showed the US rig count growing
for a ninth week, and a Libya official said Sunday that the Es Sider
and Ras Lanuf ports are preparing to restart oil exports. While OPEC
will not decide until May whether to prolong the cuts, ministers
including Russia’s Alexander Novak will meet this weekend in Kuwait
to discuss the deal’s progress. – Bloomberg News.
CURRENCIES
The US Dollar Index (DXY) finished 0.11% higher to 100.410,
recovering from the previous three sessions’ declines. Investor focus
on Monday turned to the outcome of a G-20 meeting, where finance
ministers locked heads before issuing a statement that dropped a
reference to resist all forms of protectionism. The move has renewed
concerns about the US president’s desire to pursue new trading
terms. The US currency slumped last week after the Federal Reserve
delivered a more dovish message than expected, even as it raised
interest rates.
The pound fell and gave up earlier gains after UK Prime Minister
Theresa May set 29 March as the day she will trigger Brexit. It slipped
0.31% to USD1.2358 on Monday, after touching USD1.2436 earlier
in the session, its strongest level this month. The euro was flat, up just
0.01% to USD1.0739. – Bloomberg News.
Comex gold rose 0.31% to USD1,234.00 an ounce, marking a third
day of gains.
Source: Bloomberg News, DBS Group Research and Vickers (DBS), Dow Jones
Newswires, Reuters, Agence France-Presse, CNBC, Marketwatch.com
Market Snapshot 21 March 2017
4
FX Round-up (as of New York close)
FX Technical Outlook
Levels
Last
Overnight
change
Day high
Day low
Currency
1.0739
0.01%
1.0777
1.0725
EUR/USD
GBP/USD
1.2358
-0.31%
1.2436
1.2335
USD/JPY
113
115
116
115
USD/JPY
112.5500
-0.13%
112.90
112.46
GBP/USD
1.23
1.17
1.19
1.19
AUD/USD
0.7731
0.35%
0.7748
0.7686
AUD/USD
0.73
0.73
0.72
0.71
NZD/USD
0.7055
0.54%
0.7074
0.7000
NZD/USD
0.71
0.70
0.69
0.71
USD/CAD
1.3350
0.00%
1.3373
1.3304
USD/SGD
1.42
1.44
1.46
1.45
USD/SGD
1.3967
-0.38%
1.4023
1.3956
USD/CNH
6.90
6.95
7.00
7.05
AUD/SGD
1.0799
-0.03%
1.0817
1.0752
USD/INR
69.6
70.5
71.4
72.4
NZD/SGD
0.9853
0.16%
0.9887
0.9806
USD/IDR
13339
13518
13697
13876
GBP/SGD
1.7261
-0.68%
1.7385
1.7238
EUR/SGD
1.5001
-0.36%
1.5067
1.4989
AUD/NZD
1.0958
-0.20%
1.0991
1.0950
USD/IDR
13314
-0.23%
13345
13309
USD/INR
65.3600
-0.18%
65.4725
65.3075
XAU/USD
1234
0.41%
1235.6
1229
EUR/USD
Q1 2017F
Q2 2017F
Q3 2017F
Q4 2017F
1.05
1.04
1.03
1.05
Source: DBS CIO Office, as of 6 February 2017.
Notes: Forecasts are in respect of end-of-quarter levels. The information
contained in this publication is not investment research or a research
recommendation. It is intended only to provide the observations and views
of the DBS CIO Office, which may be different from, or inconsistent with,
the observations and views of the DBS Bank research department or other
DBS Bank personnel.
Source: Bloomberg, as of last business day.
SGD Against Major Currencies
108
106
104
102
100
98
96
94
92
90
Sep-16
USD/SGD
GBP/SGD
USD Against Major Currencies
AUD/SGD
EUR/SGD
NZD/SGD
120
EUR/USD
GBP/USD
AUD/USD
NZD/USD
115
110
105
100
95
Nov-16
Jan-17
Mar-17
90
Sep-16
Oct-16
Nov-16
Dec-16
Jan-17
Source: Bloomberg, as of last business day.
Bond risk rating changes
Effective
USD/JPY
Bond Name
Issuer
Risk rating
New
Existing
Reason
13-Mar-17
PEMEX Float 03/11/22
PETROLEOS MEXICANOS
3
4
Tenor reduction
16-Mar-17
MEX 3 5/8 03/15/22
UNITED MEXICAN STATES
3
4
Tenor reduction
16-Mar-17
PEMEX 5 3/8 03/13/22
PETROLEOS MEXICANOS
3
4
Tenor reduction
16-Mar-17
CTL 5.8 03/15/22
CENTURYLINK INC
4
5
Tenor reduction
Information updated as of 16 March 2017.
Feb-17 Mar-17
Market Snapshot 21 March 2017
5
GLOSSARY
General Product Risk Rating
A 5-point scale, 1-5, indicates the relative rating of potential loss; “1” being the lowest and “5” being the highest.
Bond Risk Rating
Credit Rating
(S&P / Moody's)
AAA
AA
Outstanding Tenor (Up to X Years)
1
2
3
4
5
1
A
2
BBB
3
6
7
8
9
10
11
12
14
15
16
17
18
19
20
99 Perpetual
3
4
BB
B & Below
5
Equity Sector Classification
Sector
Cond:
Cons:
Enrs:
Finl:
Hlth:
Indu:
Inft:
Matr:
Prop:
13
2
Consumer Discretionary
Consumer Staples
Energy
Financials
Health Care
Industrials
Information Technology
Materials
Property
Valuation Terminology
Equities
EPS:
P/E:
P/B:
EG:
Bonds
YTM:
YTC:
YTP:
Earnings Per Share
Price to Earnings Ratio
Price to Book Ratio
Earnings Growth
Yield to Maturity
Yield to Call
Yield to Put
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