20171121-大华银行-Markets_Overview_4页_248kb

Global Economics & Markets Research Summary

Core Content

This document provides a comprehensive overview of global economic and financial market conditions as of 21 November 2017, highlighting key economic indicators, central bank outlooks, foreign exchange rates, stock indices, interest rates, and commodity prices. It also includes market holidays and upcoming events that may affect trading activity.

Main Highlights

Markets Overview

• Global Economic Docket: Key reports include Japan's All Industry Activity Index for September, the UK's CBI Industrial Trends Survey for November, and the US's October existing home sales and Chicago Fed National Activity Index.
• Currency Movements: Asian currencies remained strong against the USD, with USD/KRW capped below 1,100, USD/THB struggling at 32.80, and USD/MYR falling further to 4.15. The flattening of the US yield curve and uncertainty over tax reform are contributing to USD weakness.
• FX Outlook: The USD gained against the EUR after the failure of Angela Merkel's coalition government efforts. The USD/CNY central parity fixing rate is estimated at 6.6333, slightly higher than the previous day. The S$ NEER is hovering near 1.0% strength above the mid-point of the policy band.

Central Bank Outlook

• RBA Minutes: Expected to be released, but likely to generate less interest than usual.
• Bank Negara Malaysia: Governor Muhammad Ibrahim noted that the MYR is still not reflecting its fair value, despite recent gains. The central bank also announced measures to improve liquidity in the onshore MYR market, including increasing eligible collateral and introducing new BNIBs.

Equities

• US Markets: Major indices rose on Monday, driven by optimism around tax cuts and strong economic data. The Dow Jones gained 0.31%, the S&P 500 gained 0.13%, and the Nasdaq rose slightly.
• European Markets: Closed in the black, supported by positive sentiment from Wall Street and weakness in the EUR, which offset concerns over political instability in Germany.

US Treasuries

• Yield Curve: Continued to flatten, reaching 61 basis points, the lowest since late 2007.
• Yields: US Treasury yields rose as markets awaited the Fed's meeting minutes.

Commodities

• Oil Prices: Slipped due to cautious market sentiment ahead of the OPEC meeting, where output cuts may be discussed.
• Precious Metals: Gold and silver fell as the USD strengthened, while political and economic uncertainty in the US supported demand for safe-haven assets.

Economic News & Data

• Thailand: Q3 GDP growth reached +4.3% YoY, surpassing expectations and revised Q2 GDP to +3.8% YoY. The country's economy is expected to maintain strong momentum.
• Malaysia: Strong Q3 GDP of +6.2% YoY led to further USD/MYR weakness.
• South Korea: September wholesale trade and other economic indicators were reported.
• China: The NY Fed noted that the CNY has become more predictable and responsive to market forces, with official intervention diminishing.

Key Information

Upcoming Reports

• 20 November:
  • US Leading Index (October)
  • US Chicago Fed Nat Activity Index (October)
  • US Existing Home Sales (October)
  • US MBA Mortgage Applications (November)
  • US Conf. Board Consumer Confidence (November)
• 21 November:
  • US Personal Income and Spending (October)
  • US PCE Core (October)
  • US Durable Goods Orders (October)
• 23 November:
  • Singapore's Q3 GDP update
  • US Pending Home Sales (October)
• 30 November:
  • OPEC meeting to discuss output curbs extension
  • Thailand's Foreign Reserves and Trade Balance (November)

FX Rates

• USD/CNY: Estimated at 6.6333, slightly higher than the previous day.
• USD/MYR: Fell to 4.15, with a forecast of 4.05 for the end of 3Q 2018.
• SGD/NEER: Capped below 1.36, with a mid-point of 1.3706 and a range of 1.3437 to 1.3985.

Interest Rates

• USD Fed Funds Rate: 1.00%, with a meeting on 13 December.
• MYR O/N Policy Rate: 3.00%, with a meeting on 9 November.
• THB 1-Day Repo Rate: 1.50%, with a meeting on 20 December.
• SGD 3-Mth SIBOR: 1.13%
• CNY 1-Yr Working Capital: 4.35%

Stock Indices

• US Indices: Dow Jones at 23,430.33 (+0.31%), S&P 500 at 2,582.14 (+0.13%), Nasdaq at 6,790.71 (+0.12%).
• Asia-Pacific Indices: Thailand SET Index at 1,714.38 (+0.29%), Jakarta SE Composite Index at 6,053.28 (+0.03%), and others showed mixed performance.

Market Holidays/Events

• Thanksgiving (US/JP): 23 November
• Bonifacio Day (PH): 30 November
• Birthday of Prophet Muhammad (MY): 1 December
• Maulid Nabi Muham (ID): 1 December
• King's Birthday (TH): 5 December
• Constitution Day (TH): 11 December
• Christmas Day (SG/MY): 25 December

Conclusion

The global market outlook is shaped by a mix of economic data, central bank policies, and geopolitical events. Asian currencies are showing strength, supported by positive macroeconomic indicators, while the USD faces pressure from a flattening yield curve and uncertainty around US tax reform. Equities in the US and Europe are rising on optimism about economic growth, while commodities are underperforming due to cautious market sentiment. Key upcoming reports and central bank meetings are expected to influence market dynamics in the coming weeks.