Tonight, market focus would be towards a summit between the US and the group of 7 allies, as a trade showdown looms.

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1 Brought to you by Phillip Futures Pte Ltd (A member of PhillipCapital) 4 June 2018 IMPORTANT ECONOMIC DATA RELEASE TODAY Economic data is an important factor that will have an impact on market direction. There are a number of economic figures releases daily. Below are some important data to watch out for, which would have impact to today s market. No Time Event Actual Forecast Previous 1 09:30 Australia Retail Sales (April) 0.4% 0.2% 0.0% 2 16:30 UK Construction PMI (May) :00 US Factory Orders (MoM) (Apr) % 1.6% Source: Reuters/ Phillip Futures Market Movements: 1) US indices and the dollar gained strength after stellar jobs data reported. US indices soared, with the finance sector leading the recovery (Mini Dow Futures: 0.87%; Mini S&P 500 Futures: 1.04%), after nonfarm payroll results exceeded expectations. This potentially increases the chances of Fed raising rates 4 times this year, as it shows that the US economy is still doing well despite raising trade tensions. The increased probability of a more hawkish Fed in turn caused the financial sector to rise, giving strength to US indices. Going forward, focus would be placed towards the development of trade related issues. Over the weekends, finance ministers of the G7 nations banded together to condemn US s actions on tariffs, and said that it could undermine global economic confidence. After the third round of trade talks between China and the US, China waned on Sunday that should the US continue to implement tariffs on China as planned, any deals which have been discussed so far will not take effect. These warnings have shown the heightened trade tensions between other nations and the US, with these nations already having retaliatory tariffs plans in place. We are of the view that though countries are trying to avoid a trade war, they may be forced to do so should the US continue to be unpredictable and flip-flop on trade policies. At present, China has been reported to be gathering other countries against the US in this pending trade war. The EU, Japan and Russia have been some of the countries which have been subjected to tariffs by the US, and they have voiced out potential retaliation plans before. Should these nations really band together, it would raise market tensions, and potentially escalate the situation. It is also noted that in the past during the Bush era, aluminium tariff was implemented before, but quickly retracted due to the negative impact on the US economy. Hence, should this situation spiral out of control, it is expected to cause markets risk adversity to increase due to its negative impact on the global economy. Tonight, market focus would be towards a summit between the US and the group of 7 allies, as a trade showdown looms. Meanwhile, the dollar remained elevated after the upbeat job reports. US treasuries also rose back to the 2.9 levels. Going forward we are still of the view that the dollar has bottomed, due to the Fed s hawkishness as compared to the other central banks. 3) Asian indices generally opened higher, taking direction from US indices. Nevertheless trade concerns still remains as a key risk, as trade tensions between countries heightens with trade-related developments expected to give market direction for the rest of the trading session. Meanwhile Sino-US relations remains tense in other area aside from trade, such as that on military, as both parties clashed at the Shangri-La dialog in Singapore over the weekends. Should relations between both nations worsen, it may put further strain on trade negotiations as well. Written By: Samuel Siew Rep No.: SWE Phone: (65) samuelsiewwe@phillip.com.sg pfpl_commentaries@phillip.com.sg Please carefully read the important disclosures at the end of this publication.

2 1. Australia What to look out for today: Retail Sales Australian retail sales rebounded in April. This gave the AUD strength, causing it to jump approximately 15 pips in 5 mins after the release of the result. Retail Sales measure the change in the total value of inflation-adjusted sales at the retail level. It is the foremost indicator of consumer spending, which accounts for the majority of overall economic activity. Hence, these results are generally used as an early indicator to judge a country s economic strength, with better than forecasted numbers expected to cause the AUD to strengthen. Retail sales improved mainly due to an increase in sales in food retailing. This was attributed to the warming than usual weather prevalent in many parts of the country, in turn prompting people to eat out. Though this positive increase is seen to be weather dependent, and could be temporary, it is still seen to be a relief for markets as the lacklustre results in Australia have finally shown signs of recovery. Going forward, eyes will be towards the GDP results which will be released on Wednesday. At present, forecasts is showing numbers to improve from last quarter due to robust numbers from both the household and corporate sector performance in terms of wages and profits. Should Australia s overall economy show signs of improvement, it could give strength to the AUD. What assets will this impact? Australian Dollar AUD/USD Bullish On a technical perspective, the trend is currently bullish, with prices above the 20, 40, 100 and 200 EMA. A bullish crossover formed, with the 20 EMA crossing the 40 EMA. This indicates that buying strength is present. Based on the pivot point analysis, prices are currently above the pivot level. This signifies bullishness. Resistance: R1: , R2: , R3: Support: S1: , S2: , S3: AUD/USD Futures Hourly Chart PHILLIP FUTURES PTE LTD 2

3 2. U.K. What to look out for today: Construction PMI Construction PMI forecasted to dip in May. Construction Purchasing Managers Index (PMI) measures the activity level of the purchasing managers in the construction sector. A reading above 50 would suggest that the sector is in expansion. This data is used as a leading indicator of overall economic performance. Thus, investors may want to keep a close watch for this number that will be released today (see table on page 1). The general consensus is that the results would be lower than April. This is due to the fact that the uncertainty on Brexit has deterred business to invest in the UK. This can be seen from declining growth in new business, output, export orders and employment. Hence, the key issue at hand will still be the developments for the Brexit negotiations which are ongoing, as well as on the political risk which may envelop UK, should Brexit negotiations face more setbacks. Of late, the UK faced tougher pressure from the EU, with the EU stating that the Brexit deal could fall through should talks between both parties continue to produce little progress. Hence going forward, dimed business optimism is expected to continue. Therefore if the numbers indeed turns out lower, we may expect GBP to weaken. What assets will this impact? Pound Sterling GBP/USD Sell into the Rally On a technical perspective, the trend is currently bullish, with prices above the 20, 40, 100 and 200 EMA. Based on the pivot point analysis, prices are currently above the pivot level. This signifies bullishness. This bullishness was driven by the positive manufacturing PMI result which was released last Friday. Should economic data releases be negative today, it is likely to trigger a selloff. If prices break the 200 EMA, it could signal a reversal in trend. Resistance: R1: , R2: , R3: Support: S1: , S2: , S3: GBP/USD Hourly Chart PHILLIP FUTURES PTE LTD 3

4 3. U.S. What to look out for today: Factory orders Factory orders forecasted to decline in April. Factory Orders is one of the key determinant for manufacturing numbers, as it measure the total value of new purchase orders placed with manufacturers. Thus, investors may want to keep a close watch for this number that will be released today (see table on page 1), as manufacturing is one of the key sectors that President Trump is focused on. The general consensus is that the results would be lower in April. This is largely attributed to the escalating trade tension between the US and its trading partners, which is likely to negatively impact future order books. The concerns on trade have recently been placed in the limelight, after the G7 banded together to condemn the US of imposing tariffs. This is deemed to be a rare occurrence, and could threaten the effectiveness of the Western alliance. Hence should trade tension spiral out of control, the EU economy is expected to be impacted negatively. Therefore if the numbers happen to turn out lower than forecasted, we foresee that it would weaken US indices and the USD. What assets will this impact? Mini S&P 500 Futures, Mini Dow Futures, US Dollar Mini S&P 500 Futures Sell into the Rally On a technical perspective, the trend is currently bullish, with prices trading above the 20, 40, 100 and 200 EMA. Should trade tensions continue to escalate today, it is likely to trigger a selloff. If prices break the 200 EMA, it could signal a reversal in trend. Based on Fibonacci Retracement, prices are expected to find some meaningful support at the 50% levels. Resistance: 38.2%: ; 23.6%: Support: 50%: ; 200 EMA: Mini S&P 500 Futures Hourly Chart Source: Reuters/ Phillip Futures PHILLIP FUTURES PTE LTD 4

5 Mini Dow Futures Sell into the Rally On a technical perspective, the trend is currently bullish, with prices trading above the 20, 40, 100 and 200 EMA. Should trade tensions continue to escalate today, it is likely to trigger a selloff. If prices break the 200 EMA, it could signal a reversal in trend. Based on Fibonacci Retracement, prices are expected to find some meaningful support at the 100% levels. Resistance: 127%: 24724; R1: Support: 200 EMA: 24639; 100%: Mini Dow Futures Hourly Chart Source: Reuters/ Phillip Futures USD/SGD Bearish On a technical perspective, the trend is currently bearish with prices trading below the 20, 40, 100 and 200 EMA. Prices have tried to break above the 40 EMA but failed. This shows that selling pressure is present. Based on the pivot point analysis, prices are currently below the pivot level. This signifies bearishness. Resistance: R1: , R2: , R3: Support: S1: , S2: , S3: PHILLIP FUTURES PTE LTD 5

6 USD/SGD Hourly Chart PHILLIP FUTURES PTE LTD 6

7 Economic Calendar Date Time Economic Release Period Survey Actual Surprise Previous Unit United States 4 Jun 22:00 Factory Orders MM Apr -0.3% 1.6% Percent 5 Jun 22:00 ISM N-Mfg PMI May Index 5 Jun 22:00 JOLTS Job Openings Apr 6.550M Person 6 Jun 20:30 International Trade $ Apr -51.3B -49.0B USD 6 Jun 20:30 Labor Costs Revised Q1 2.7% 2.7% Percent 6 Jun 20:30 Productivity Revised Q1 0.8% 0.7% Percent 7 Jun 20:30 Initial Jobless Claims 28May,w/e 221k Person 7 Jun 20:30 Continued Jobless Claims 21May,w/e 1.726M Person 8 Jun 03:00 Consumer Credit Apr 13.00B 11.62B USD 8 Jun 22:00 Wholesale Invt(y), R MM Apr 0.2% Percent China 8 Jun Exports YY May 12.9% Percent 8 Jun Imports YY May 21.5% Percent 8 Jun Trade Balance USD May 28.78B USD 9 Jun 09:30 PPI YY May 3.4% Percent 9 Jun 09:30 CPI YY May 1.8% Percent 9 Jun 09:30 CPI MM May -0.2% Percent Singapore India 6 Jun 17:00 Cash Reserve Ratio N/A 4.00% 4.00% Percent 6 Jun 17:00 Repo Rate N/A 6.00% 6.00% Percent 6 Jun 17:00 Reverse Repo Rate N/A 5.75% 5.75% Percent PHILLIP FUTURES PTE LTD 7

8 Date Time Economic Release Period Survey Actual Surprise Previous Unit Japan 5 Jun 07:30 All Household Spding YY Apr 0.8% -0.7% Percent 5 Jun 07:30 All Household Spending MM Apr 0.7% -0.1% Percent 5 Jun 08:30 Services PMI May 52.5 Index 8 Jun 07:50 Current Account NSA JPY Apr 2,096.5B 3,122.3B JPY 8 Jun 07:50 GDP Rev QQ Annualised Q1-0.6% Percent 8 Jun 07:50 GDP Revised QQ Q1-0.2% Percent 8 Jun 07:50 GDP Cap Ex Rev QQ Q1-0.1% Percent United Kingdom 4 Jun 16:30 Markit/CIPS Cons PMI May 52.5 Index 5 Jun 16:30 Markit/CIPS Serv PMI May 52.8 Index 7 Jun 15:30 Halifax House Prices MM May -3.1% Percent Eurozone 4 Jun 16:30 Sentix Index Jun 19.2 Index 4 Jun 17:00 Producer Prices MM Apr 0.4% 0.1% Percent 4 Jun 17:00 Producer Prices YY Apr 2.4% 2.1% Percent 5 Jun 16:00 Markit Serv Final PMI May Index 5 Jun 16:00 Markit Comp Final PMI May 54.1 Index 5 Jun 17:00 Retail Sales MM Apr 0.1% Percent 5 Jun 17:00 Retail Sales YY Apr 0.8% Percent 7 Jun 17:00 GDP Revised QQ Q1 0.4% 0.4% Percent 7 Jun 17:00 GDP Revised YY Q1 2.5% 2.5% Percent New Zealand 5 Jun Milk Auctions w/e 3,637 Tonne PHILLIP FUTURES PTE LTD 8

9 Date Time Economic Release Period Survey Actual Surprise Previous Unit Australia 4 Jun 09:30 Business Inventories Q1 0.1% 0.2% Percent 4 Jun 09:30 Retail Sales MM Apr 0.2% 0.0% Percent 5 Jun 09:30 current account balance Q1-9.95B B AUD 5 Jun 09:30 Net Exports Contribution Q1 0.50% -0.50% Percent 5 Jun 12:30 RBA Cash Rate Jun 1.50% 1.50% Percent 6 Jun 09:30 GDP QQ Q1 0.8% 0.4% Percent 6 Jun 09:30 GDP YY Q1 2.7% 2.4% Percent 7 Jun 09:30 Trade Balance G&S (A$) Apr 1,000M 1,527M AUD Source: Reuters/ Phillip Futures Note: Releases highlighted in red denote indicators which are deemed by the analyst to potentially cause significant market movements PHILLIP FUTURES PTE LTD 9

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