SINGAPORE – Inflation and control of the pandemic remained major overhangs during the past week as equity markets continued to plod higher, supported by a flush of liquidity and low interest rates.
With the exception of large techs, Wall Street continued to see gains with the Dow Jones rising another 2.7 per cent during the past week to 34,777.76 points. The broad-based Nasdaq edged up 1.2 per cent to 4,232.6 points as earnings continued to please.
But despite a recovery on Friday, tech stocks faced significant headwinds, causing the tech-heavy Nasdaq to give up 1.5 per cent last week to 13,752.24 points.
Concerns about inflationary pressures and proposals for capital gains tax in the US could continue to weigh down tech plays in the week ahead, analysts reckon.
In Singapore, the Straits Times Index ended flattish for the week at 3,200.26 points despite strong performances by blue chips and banks.
The big concern for market remains inflation, and the reaction of central bankers to perceived price rises.
But disappointing April job numbers in the United States – just some 266,000 jobs were created, against expectations of 1 million – has somewhat tamped down expectations that the US Federal Reserve will contemplate tightening policy.
In any case, the 10-year Treasury note is now down to 1.55 per cent, compared to about 1.6 per cent about a month ago.
Still, this Wednesday’s speeches by various Fed bosses will be closely watched, as will the consumer price index data on the same day.
On Thursday, the market will receive the producer price index data, followed by retail sales numbers on Friday.
All will be closely watched for indications of inflationary pressures.
Still, with half-time of the second quarter coming, stocks have remained relatively steady so far over the past six weeks. Since the end of March, the short term volatility gauge for the FTSE World Index has declined from 11 per cent to 8 per cent.
Stock benchmarks across Asia have mostly moved in unison, ranging from 6 per cent gains for Taiwan’s TAIEX to a 3 per cent decline for the Philippine’s PSEi Index.
In Singapore, the big news of the week was the widely anticipated restructuring of Singapore Press Holdings (SPH).
The company is removing all its media businesses and associated assets to become a not-for-profit company limited by guarantee. This will leave the listed entity as a pure property play, with a two-thirds stake in its Reit.
With almost 7 per cent of its net asset value removed, SPH stock declined 27 cents or 15 per cent on Friday to close at $1.52.
The story may not end here, speculate some market insiders.
With the media business hived off, the company is potentially freed from the controls of the Newspaper & Printing Act of 2002, which limits any single shareholding in the media group to 5 per cent. This opens up potential new opportunities. But it also makes it vulnerable to takeover bids if the stock falls too far below its post demerger net asset value per share of some $2.08.
Meanwhile, Yangzijiang and OCBC were the top performers for the week on the local bourse. Resource stocks like Southern Alliance Mining and Fortress Minerals have also soared during the past month.
Despite an abbreviated week ahead with the Hari Raya Puasa holiday on Thursday, Singapore has as many as 40 stocks going ex-dividend.
Amongst those reporting results are EC World Reit and NetLink NBN Trust on Tuesday, and Asian PAY Television Trust, Frasers Property, Sasseur Reit and Golden-Agri Resources on Wednesday.