20180625-大华银行-Markets_Overview_5页_218kb

Global Economics & Markets Research Summary

Core Content

This document provides a comprehensive overview of global economic and financial market developments as of June 25, 2018. It includes key economic indicators, central bank outlooks, FX rates, stock indices, commodity prices, bond yields, and market holidays or events. The information is aimed at investors and financial professionals for informational purposes and highlights the interplay between trade tensions, monetary policy decisions, and market performance.

Main Highlights

Economic Indicators

• Germany's IFO Business Climate: Expected to decline to 101.8 in June from 102.2, continuing a pullback since the November peak.
• US New Home Sales: Expected to stabilize at 665k in May.
• Dallas Fed Manufacturing Outlook: Moderates to 24.0 in May from a previous 26.8.
• Indonesia's Trade Data: Expected to show a slowdown in growth rate.
• Singapore's CPI: Expected to rise to 0.4% y/y from 0.1% y/y.
• China's RRR Cut: The PBoC announced a 50bps reduction in the reserve requirement ratio (RRR), effective July 5, unlocking CNY 700 billion of liquidity. This is part of a broader effort to support small and micro enterprises and control leverage.
• China's Industrial Production: Expected to rise by 10.0% y/y in May, with the 7D reverse repo rate projected to reach 5.0% by the end of June.

Central Bank Outlook

• RBNZ (New Zealand): Expected to keep the Official Cash Rate (OCR) at 1.75% on June 28.
• Bank Indonesia: Expected to raise the 7D reverse repo rate by 25bps to 5.0% on June 28.
• BIS Statement: Advises central banks to continue gradual tightening, while noting potential market volatility due to rate hikes and the end of stimulus. The outlook for the global economy is positive, but risks include protectionism and rising bond yields.

FX Market

• USD: Fell against most G-10 currencies on Friday, with AUD and NZD gaining the most.
• SGD: Traded within a range of 1.3537-1.3624 against USD. UOB estimates SGD NEER to trade between 1.3592 and 1.3525.
• PBoC Fixing: Predicted to set the midpoint 40 pips weaker at 6.4844/USD.

Equities

• US Stocks: Rose on Friday, with the Dow Jones breaking its 8-day losing streak, S&P 500 gaining 0.2%, and Nasdaq Composite seeing some profit-taking.
• Asian Equities: Mixed performance, with Hang Seng, Shanghai Composite, and KOSPI gaining, while Nikkei 225 and TAIEX fell.
• Futures: Nikkei 225 was flat, while Hang Seng and S&P/ASX 200 gained.

US Treasuries

• Bond Yields: US 2-year yield at 2.54%, 10-year at 2.89%. Market volatility expected as central banks lift rates and end stimulus.

Commodities

• Brent Crude Oil: Dropped to USD 74.20/bbl after OPEC and Russia agreed to increase production, but UOB maintains a range trading view for the next four quarters.
• Gold: Rebounded to $1,270.56/oz, rising from six-day lows due to a weaker USD.

Key Information

Market Outlook

• Trade tensions between the US and China remain a key concern, with the PBoC's RRR cut expected to support smaller businesses amid slowing economic growth.
• The US manufacturing PMI dropped to a 7-month low, while the Eurozone PMI remained in line with expectations but at its lowest since 2016.
• The BIS warns that protectionism and sudden increases in bond yields could trigger a global downturn.

Upcoming Events

• June 26: Singapore releases May industrial production data, and Hong Kong reports May trade data.
• June 27: China releases May industrial profits data.
• June 28: Bank Indonesia's monetary policy meeting expected to result in a 25bps rate hike.
• June 29: South Korea reports May industrial production, and Singapore releases money supply and credit data.
• June 30: China releases June PMI data.
• July 5: PBoC's RRR cut becomes effective.
• July 2: HKSAR Establishment in Hong Kong.
• July 4: US Independence Day.
• July 16: Marine Day in Japan.
• July 27 and 30: Asrnha Bucha Day and King's Birthday in Thailand.
• August 6: Bank Holiday in Australia.
• August 9: National Day in Singapore.
• August 15: Liberation Day in South Korea, Independence Day in India and Malaysia, Ninoy Aquino Day in the Philippines.
• August 22: Hari Raya Haji in Singapore, Malaysia, Indonesia, and India.

Summary Table

Conclusion

The week ahead is marked by key economic data releases and central bank decisions, with a focus on trade tensions, monetary policy adjustments, and market sentiment. Investors are advised to closely monitor developments in the US-China trade relationship, as well as central bank actions, which may influence global financial markets.