Global Economics & Markets Research Summary (06 December 2017)
Core Content Overview
This report provides an analysis of global financial markets, central bank outlooks, foreign exchange rates, equity indices, and commodity prices as of 6 December 2017. It highlights key economic data, policy decisions, and market reactions across major economies including the US, Japan, Australia, and others.
Key Highlights
-
Central Bank Decisions:
- The Bank of Canada is expected to keep the policy rate unchanged at 1%, though some economists suggest a 25bps hike.
- The Reserve Bank of Australia (RBA) left the official cash rate (OCR) at 1.5%, marking the 16th consecutive month of rate stability.
- The Reserve Bank of India (RBI) is set to hold its final monetary policy meeting of 2017, with UOB predicting a 25bps rate cut to 5.75% due to weaker economic fundamentals.
- Federal Reserve Governor Jerome Powell received bipartisan support for his nomination as the next Fed Chief.
-
Market Focus Events:
- The US November ADP jobs report will be a key focus.
- US 3Q nonfarm productivity and unit labor costs are also important.
- German October factory orders, construction PMI, and Eurozone retail PMI will be released.
- Bank of Japan and ECB officials will speak on public events.
- Malaysia will report October imports/exports data.
- US federal spending plan extension is under discussion, with potential delays or extensions to avoid a government shutdown.
FX Market Summary
- USD edged higher on Tuesday, with the yen weakening to 112.60 against the dollar.
- Euro also fell against the dollar, reaching 1.1801 in intraday lows.
- GBP dipped to 1.3371 due to Brexit concerns, but recovered to 1.3443.
- AUD rebounded slightly after the RBA decision, closing at 0.7607, but fell to 0.7576 after the miss in Australia’s 3Q GDP.
- SGD is expected to trade within a 1.3415–1.3481 range, based on UOB’s SGD NEER forecast.
- RMB continued to weaken, with the PBoC setting the midpoint at 6.6130 for the 8th consecutive day.
Equity Market Summary
- US markets ended lower, with the Dow Jones down 0.45%, S&P 500 down 0.37%, and Nasdaq down 0.11%, due to cautious sentiment around tax reform.
- Asian markets mostly fell, following US performance, with the Nikkei 225 down 0.37%, Shanghai Composite down 0.18%, TAIEX down 0.79%, and Hang Seng down 1.01%.
- KOSPI rose 0.34%.
- Southeast Asian markets had mixed results, with KLCI and PSEi up, while STI and JCI were flat.
- Thai markets were closed for the King's Birthday on 5 December.
Commodities
- Crude oil prices rebounded after OPEC agreed to limit production through the end of 2018 and expectations of falling US inventories.
- Nymex WTI closed at $57.62, up $0.15.
- London Brent closed at $62.67, up $0.22.
- Gold fell to $1,261.60 as the stronger USD and higher rate expectations dampened demand.
Economic Data & Reports
- US November ISM Non-Manufacturing PMI dropped to 54.5, below the peak of 60.1.
- US October trade deficit widened to $48.7bn, while the September deficit was revised to $44.9bn.
- Private sector PMI showed slower growth in Japan (51.2) and UK (53.8), while Eurozone remained stable at 56.2.
- China’s Caixin composite PMI rose to 51.6, and services PMI to 51.9, but India’s services PMI fell into contraction at 48.5.
- Philippines inflation edged down to 3.3% y/y, while Taiwan’s inflation rose to 0.35% y/y.
Market Holidays/Events
- Thailand: King’s Birthday (5 Dec), Constitution Day (11 Dec)
- SGMY: Christmas Day (25 Dec)
Key Economic Indicators Table
| Time |
Indicators |
Month |
Actual |
Previous |
| 05 Dec |
SK Foreign Reserves USD |
Nov |
387.3 |
384.5bn |
| 05 Dec |
SK BoP Current Account Balance USD |
Oct |
5715.5 |
12287.5mn |
| 05 Dec |
SG Nikkei Singapore PMI |
Nov |
55.4 |
54.2 |
| 05 Dec |
HK Nikkei Hong Kong PMI |
Nov |
50.7 |
50.3 |
| 05 Dec |
CN Caixin China PMI Composite |
Nov |
51.6 |
51.0 |
| 05 Dec |
CN Caixin China PMI Services |
Nov |
51.9 |
51.2 |
| 05 Dec |
US Trade Balance USD |
Oct |
-48.7 |
-44.9bn |
| 05 Dec |
US Markit US Services PMI |
Nov |
54.5 |
54.7 |
| 05 Dec |
US Markit US Composite PMI |
Nov |
54.5 |
54.6 |
| 05 Dec |
US ISM Non-Manf. Composite |
Nov |
57.4 |
60.1 |
FX Rates (as at 05 Dec 2017)
| Currency |
Close |
Asian High |
Asian Low |
NY High |
NY Low |
| EUR |
1.1863 |
1.1877 |
1.1829 |
1.1877 |
1.1801 |
| GBP |
1.3422 |
1.3539 |
1.3371 |
1.3482 |
1.3371 |
| AUD |
0.7645 |
0.7654 |
0.7590 |
0.7654 |
0.7597 |
| NZD |
0.6891 |
0.6908 |
0.6841 |
0.6908 |
0.6852 |
| JPY |
112.46 |
113.09 |
112.37 |
112.87 |
112.38 |
| SGD |
1.3458 |
1.3494 |
1.3454 |
1.3484 |
1.3454 |
| MYR |
4.0665 |
4.0710 |
4.0465 |
4.0710 |
4.0465 |
| IDR |
13519 |
13524 |
13503 |
- |
- |
| THB |
32.59 |
32.64 |
32.56 |
- |
- |
| PHP |
50.648 |
50.685 |
50.535 |
- |
- |
| INR |
64.386 |
64.464 |
64.225 |
- |
- |
| TWD |
29.993 |
30.030 |
29.983 |
- |
- |
| KRW |
1085.80 |
1088.10 |
1081.97 |
- |
- |
| HKD |
7.8129 |
7.8187 |
7.8127 |
- |
- |
| CNY |
6.6193 |
6.6194 |
6.6087 |
- |
- |
Stock Indices (as of 05 Dec 2017)
| Indices |
Closing |
% Chg |
YTD % Chg |
| Dow Jones Industrial Average |
24180.64 |
-0.45 |
+22.36 |
| S&P 500 |
2629.57 |
-0.37 |
+17.45 |
| NASDAQ Composite |
6762.21 |
-0.19 |
+25.62 |
| Tokyo Nikkei 225 |
22622.38 |
-0.37 |
+18.35 |
| London FTSE 100 |
7327.50 |
-0.16 |
+2.59 |
| Frankfurt DAX |
13048.54 |
-0.08 |
+13.65 |
| All Ordinaries |
6057.31 |
-0.22 |
+5.91 |
| FTSE Straits Times Index |
3438.06 |
-0.01 |
+19.35 |
| FTSE Bursa Malaysia KLCI |
1724.84 |
+0.68 |
+5.06 |
| Jakarta SE Composite Index |
6000.47 |
+0.04 |
+13.29 |
| Thailand SET Index |
1697.61 |
-0.12 |
+10.02 |
| Philippines SE PSEi |
8145.00 |
+0.75 |
+19.07 |
| Taiwan SE Weighted Index |
10566.85 |
-0.79 |
+14.19 |
| Korea SE KOSPI |
2510.12 |
+0.34 |
+23.87 |
| Hong Kong Hang Seng Index |
28842.80 |
-1.01 |
+31.10 |
| Shanghai SE Composite Index |
3303.68 |
-0.18 |
+6.45 |
| India Sensex 30 Index |
32802.44 |
-0.20 |
+23.19 |
UOB's SGD NEER Forecast (as of 06 Dec 2017)
| Range |
Value |
| Lower-End |
1.3892 |
| Upper-End |
1.3347 |
| Mid-Point |
1.3614 |
Interest Rates
| Rates |
Current |
Next CB Meet |
UOB Forecast |
| USD Fed Funds Rate |
1.00–1.25% |
12–13 Dec |
1.25–1.50% |
| EUR Refinancing Rate |
0.00% |
14 Dec |
0.00% |
| GBP Repo Rate |
0.50% |
14 Dec |
0.50% |
| AUD Official Cash Rate |
1.50% |
05 Dec |
1.50% |
| NZD Official Cash Rate |
1.75% |
09 Nov |
1.75% |
| JPY Official Cash Rate |
0–0.10% |
21 Dec |
0–0.10% |
| SGD 3-Mth SIBOR |
1.21% |
- |
- |
| MYR O/N Policy Rate |
3.00% |
09 Nov |
3.00% |
| IDR 7-Day Repo Rate |
4.25% |
14 Dec |
4.25% |
| THB 1-Day Repo Rate |
1.50% |
20 Dec |
1.50% |
| PHP O/N Reverse Repo |
3.00% |
14 Dec |
3.00% |
| INR Repo Rate |
6.00% |
- |
6.00% |
| TWD Discount Rate |
1.375% |
15 Dec |
1.375% |
| KRW Base Rate |
1.25% |
30 Nov |
1.50% |
| HKD Base Rate |
1.00% |
- |
1.00% |
| CNY 1-Yr Wking Capital |
4.35% |
- |
4.35% |
Bond Yields (as of 05 Dec 2017)
| Bond Yields |
Closing |
Net Chg |
| US 2-Year Bond |
1.82 |
+1.2 |
| US 10-Year Bond |
2.35 |
-2.1 |
| JP 10-Year JGB |
0.05 |
+0.5 |
| EU 10-Year Bund |
0.32 |
-2.4 |
| UK 10-Year Long Gilt |
1.26 |
-3.0 |
