Brought to you by Phillip Futures Pte Ltd (A member of PhillipCapital) 8 May 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 (MoM) (Mar) 0.0% 0.2% 0.6% 2 15:30 U.K. Halifax House Price Index (MoM) (Apr) - -0.2% 1.5% Themes moving markets today: Source: Reuters/ Phillip Futures 1) President Trump to announce his decision on Iran sanctions tonight (5am Singapore time). Prices of oil have rallied over the past 3 months due to market expectation that the US would once again reimpose sanctions on Iran s oil exports. Iran is the third largest global producer of oil, hence should its oil exports be restricted, it would cause a reduction of oil in the markets and lessen the current supply glut. In our view, the probability of this happening is high. This is because President Trump had indicated before that the deal for the wavier, which was done during the Obama era, was disadvantageous for the US. During his election campaign, he also promised to remove the current Iran deal. Hence he is likely to use this opportunity to fulfil his campaign promise. Nevertheless, this event is expected to give the largest upside and downside risk to the Oil & Gas and Offshore & Marine sectors, which would impact markets. In fact, oil prices retraced as some investors took profit after President Trump tweeted that he would be making the announcement tonight. This indicates that investors are still remaining cautious, and that President Trump s decision is still uncertain. Hence this uncertainty is expected to weight on markets today. 2) US indices carried on its rally, after a spate of merger and acquisition announcements boosted market confidence (Mini S&P Futures: 0.26%; Mini Dow Futures: 0.30%). Continued strength in the technology sector helped US indices to gain back some of its losses from last week. This is expected to give Asian indices some direction for the day. We are still of the view that there would be more profit taking pressure for US indices, as markets are still relatively bearish on US indices, and are constantly looking for a reason to sell. There is also a lack of further catalysts to push markets higher, now that one of the best earnings season in years is coming to an end. In fact, there are also more headwinds ahead for US markets, such as trade relation concerns between US and China, and a potential rising interest rate environment. 3) Asian markets generally opened higher after taking direction from the US, with the technology and financial sectors buoying the major indices. However, the oil related sectors remained supressed, as investors await President Trump s decision on the Iran deal. China indices (FTSE A-50 Futures: 1.35%) had strong gains as markets anticipate the import, export and trade balance figures which is slated for release later in the day. Numbers have been forecasted to be show a healthy rebound. This numbers would be closely watched, as it would a way to monitor to see if numbers have changed since trade tensions between the US and China escalated. 4) USD gained strength after a decline in the EUR due to soft economic indicators. Rising treasury rate yield and broadly strong economic data have been the key drivers in giving strength to the USD over the past few weeks. In fact, the USD has erased all of its 2018 losses over the short span of a few weeks, because of expectations that the Fed would continue to raise rates. This was coupled with a decrease in probability of the BoE, ECB and BoJ tightening monetary policy anytime soon. At present, we maintain our view that the USD have seemingly bottomed up. Hence, we foresee that it would give rise to a higher USD demand, and greater dollar strength. Written By: Samuel Siew Rep No.: SWE300299240 Phone: (65) 6531 5474 Email: samuelsiewwe@phillip.com.sg pfpl_commentaries@phillip.com.sg Please carefully read the important disclosures at the end of this publication.
What assets will this impact? Mini S&P Futures Mini S&P 500 Futures Sell into rally On a technical perspective, the trend is currently bullish with prices above the 20, 40, 100 and 200 EMA. Prices are currently testing the 20 EMA support. Should it break below this level, more selling pressure is likely to come in. Based on Fibonacci retracement, prices are expected to find some meaningful support at the 100% levels. Resistance: R1: 2685.39; 61.8%: 2706.9 Support: 100%: 2647.88; 127%: 2606.34 Mini S&P 500 Futures Hourly Chart Source: Reuters/ Phillip Futures 1. Australia What to look out for today: Retail Sales Results Retail sales in Australia fell below expectations in March. Retail sales results are generally used as an early indicator to judge a country s economic strength. Therefore, better than expected numbers would cause the AUD to strengthen. Hence after poorer than expected numbers were released this morning, the AUD fell approximately 23 pips against the USD. In February, Australian retail sales had its strongest growth increase since November 2017. This was attributed to stronger job market conditions and improved consumer sentiment. However, this did not last. This is due to as a rise for food sales being offsetted by falls in all other industries. It also suggests that total real consumption growth have slowed down from the pervious quarter. With numbers showing a poor growth, it is expected to weigh in on the interest rate decision when the RBA meets again next month. Going forward, focus will be on the other economic numbers release, which would give a clear indication of Australia s economy, such as the jobs data on the 16 th and 17 th of May. Till then, we are of the view that the AUD would continue to face selling pressure due to the lack of catalyst. PHILLIP FUTURES PTE LTD 2
What assets will this impact? Australian Dollar AUD/USD Bearish On a technical perspective, the trend is currently bearish with prices trending below the 20, 40, 100 and 200 EMA. Prices have tested the 100 EMA but failed to break above it. This indicates that selling pressure is still present. Based on the pivot point analysis, prices are currently below the pivot level. This signifies bearishness. Resistance: R1: 0.42399, R2: 0.75663, R3: 0.76162 Support: S1: 0.74900, S2: 0.74665, S3: 0.74166 AUD/USD Hourly Chart 2. U.K. What to look out for today: Halifax House Price Index Halifax House Price Index forecasted to decline in April. Halifax House Price Index measures the change in housing prices, is used a leading indicator to assess the health of the UK housing market, as well as a key indicator used to judge UK s overall economic condition. Therefore, investors may want to keep a close watch for this number that will be released today (see table on page 1). In March, housing prices rose unexpectedly. This is due to housing prices being deemed to be at their most affordable level in a decade, hence garnering buying interest. Nevertheless, the general consensus is that prices are expected to correct this month. This is because the housing market is still under pressure in an environment of slowly rising interest rates. Moreover, with crimped household finances and rates of new home-building still slow relative to demand, the probability of a sharp pullback is increased. Therefore if the numbers indeed turns out lower, we should expect UK indices to correct and the GBP to weaken. What assets will this impact? - FTSE 100 Futures and Sterling Pound FTSE 100 Futures Sell into rally On a technical perspective, the trend is currently bearish with prices trending below the 20, 40 and 200 EMA. Based on Fibonacci extension, prices retraced after failing to break above the 161.8% resistance. Should economic data tonight be lacklustre, coupled with headwinds from Brexit talks, which resume tonight after yesterday s holiday, markets are expected to face more selling pressure. PHILLIP FUTURES PTE LTD 3
Resistance: 161.8%: 7551.7, R1: 7656.5 Support: 100 EMA: 7477.8, 127%: 7382.8 FTSE 100 Futures Daily Chart Source: Reuters/ Phillip Futures EUR/GDP Bearish On a technical perspective, the trend is currently bearish, as prices are below the 20, 40, 100 and 200 EMA. A bearish crossover formed, with the 40 EMA crossing the 100 EMA. This indicates that selling pressure is present. Based on the pivot point analysis, prices are currently below the pivot level. This signifies bearishness. Resistance: R1: 0.88297, R2: 0.88662, R3: 0.89284 Support: S1: 0.87675, S2: 0.87418, S3: 0.86796 EUR/GBP Hourly Chart PHILLIP FUTURES PTE LTD 4
Economic Calendar Date Time Economic Release Period Survey Actual Surprise Previous Unit United States 8 May 03:00 Consumer Credit Mar 15.00B 10.60B USD 8 May 22:00 JOLTS Job Openings Mar 6.052M Person 9 May 20:30 PPI Final Demand YY Apr 3.0% Percent 9 May 20:30 PPI Final Demand MM Apr 0.3% 0.3% Percent 9 May 20:30 PPI exfood/energy YY Apr 2.7% Percent 9 May 20:30 PPI exfood/energy MM Apr 0.2% 0.3% Percent 9 May 22:00 Wholesale Invt(y), R MM Mar 0.5% 0.5% Percent 10 May 20:30 Core CPI YY, NSA Apr 2.1% Percent 10 May 20:30 CPI MM, SA Apr 0.3% -0.1% Percent 10 May 20:30 CPI YY, NSA Apr 2.5% 2.4% Percent 10 May 20:30 Initial Jobless Claims 30Apr,w/e 211k Person 10 May 20:30 Continued Jobless Claims 23Apr,w/e 1.756M Person 11 May 20:30 Import Prices MM Apr 0.5% 0.0% Percent 11 May 22:00 U Mich Sentiment Prelim May 99.5 98.8 Index China 8 May Exports YY Apr -2.7% Percent 8 May Imports YY Apr 14.4% Percent 8 May Trade Balance USD Apr -4.98B USD 10 May 09:30 PPI YY Apr 3.1% Percent 10 May 09:30 CPI YY Apr 2.1% Percent 10 May 09:30 CPI MM Apr -1.1% Percent 10 May M2 Money Supply YY Apr 8.2% Percent 10 May New Yuan Loans Apr 1,120.0B CNY 10 May Outstanding Loan Growth Apr 12.8% Percent PHILLIP FUTURES PTE LTD 5
Date Time Economic Release Period Survey Actual Surprise Previous Unit United Kingdom 8 May 15:30 Halifax House Prices MM Apr 1.5% Percent 10 May 07:01 RICS Housing Survey Apr 0 Balance 10 May 16:30 Industrial Output MM Mar 0.1% Percent 10 May 16:30 Industrial Output YY Mar 2.2% Percent 10 May 16:30 Manufacturing Output MM Mar -0.2% Percent 10 May 16:30 Manufacturing Output YY Mar 2.5% Percent 10 May 16:30 Goods Trade Balance GBP Mar -10.20B GBP 10 May 19:00 BOE MPC Vote Hike May 2 Number 10 May 19:00 BOE MPC Vote Unchanged May 7 Number 10 May 19:00 BOE MPC Vote Cut May 0 Number 10 May 19:00 BOE Bank Rate May 0.75% 0.50% Percent Singapore - - - - - - - - - Japan 8 May 07:30 All Household Spding YY Mar 1.1% 0.1% Percent 8 May 07:30 All Household Spding MM Mar 0.7% -1.5% Percent 10 May 07:50 Current Account NSA JPY Mar 3,009.2B 2,076.0B JPY Australia 8 May 08:30 Retail Trade Q1 0.9% Percent 8 May 09:30 Retail Sales MM Mar 0.6% Percent 11 May 09:30 Housing Finance Mar -0.2% Percent India 11 May 19:30 Industrial Output YY Mar 7.1% Percent Eurozone 7 May 16:30 Sentix Index May 19.6 Index PHILLIP FUTURES PTE LTD 6
Date Time Economic Release Period Survey Actual Surprise Previous Unit New Zealand 9 May 06:45 Elec Card Retail Sales mth Apr 1.0% Percent 9 May 06:45 Elec Card Retail Sales YY Apr 6.0% Percent 10 May 05:00 Cash Rate N/A 1.75% 1.75% Percent 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 7
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