Phillip Futures Research: Global Market Outlook 2018
USA’s Market Outlook
The US S&P500 index continues to create new highs with technology stocks and President Trump’s tax reform expectations as main drivers in 2017. Moving forward into 2018, when Janet Yellen steps down, investors will be keeping a close watch on the new Federal Reserve chairman and his stance on US interest rates. If the committee takes a dovish view on US economy, investors can expect a slower pace in the interest rate hike cycle. When this happens, US S&P500 futures will most likely continue its bull run into the first quarter of 2018.
UK’s Market Outlook
With UK already facing strong headwinds in its Brexit negotiation, news of Prime Minister Theresa May being urged to step down seemed to worsen the situation, causing the FTSE100 index futures to fall in recent weeks. But as investors eagerly await details of Brexit’s finalisation before taking action, the index is expected to bottom out by end of 2017 with periods of price consolidation expected in early 2018.
Europe’s Market Outlook
European stock index futures e.g. the EURO STOXX 50 are weighed down by issues such as political uncertainty in Germany, the Catalonia crisis and the potential impact that Brexit may have on Europe’s economy. If these risks remain for a prolonged period of time without resolution, investors may start moving funds out of European markets. This will result in a potential sell down in the European equity indices as early as 1st quarter of 2018.
Japan’s Market Outlook
Japan’s Q3 2017 GDP results indicate that its economy has been growing for 7 consecutive quarters. This is its longest expansion since 2001, a sign that Japan’s economy is on track to recovery. With Prime Minister Abe winning the latest election, investors are already expecting Bank of Japan’s quantitative easing policies to continue. Therefore, unless there is a new catalyst to push Nikkei 225 higher, 1st quarter of 2018 will likely see periods of consolidation as investors may start taking profit.
China’s Market Outlook
China’s alarming increase in household debt has put pressure on the FTSE China A50 index futures. Debt numbers which doubled from 29.6% of GDP in 2012 to 44.3% of GDP last year have caused panic selling among investors, resulting in the index dropping about 5% within a week. The Chinese government reacted by working on reforms to regulate leverage and borrowings to prevent a potential debt crisis. At the start of 2018, we may see high volatility as investors begin to react to the Chinese government’s policies.
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Singapore’s Market Outlook
The most recent economic data, including the Q3 GDP and Q3 non-domestic oil exports, beat market expectations. This was mainly driven by strong growth in Singapore’s semiconductor manufacturing sector. The semiconductor manufacturing sector has been benefiting from the high demand in electronic product launches such as the iPhone X. The positive economic data prompted an upward revision of the 2018 forecast by Singapore’s Ministry of Trade and Industry. In 2018, markets participants can expect this bullish trend in the semiconductor sector to take the SIMSCI to greater heights. Conversely, any sign of slowing down in the this sector next year may lead to a correction in the Singapore stock index.
This article is kindly contributed by Phillip Futures.
Phillip Futures is one of the region’s top brokerages for the trading of global futures, foreign exchange, energy, metals and commodity futures. It was established in 1983 as a member of PhillipCapital Group, and was one of the founding clearing members of Singapore Exchange Derivatives Trading. It currently holds the Capital Markets Services Licence issued by the Monetary Authority of Singapore (MAS).
Phillip Futures is also the first to launch the powerful MetaTrader 5 (MT5) platform in Singapore. MT5 offers advanced technical analysis tools and allows traders to create their own trading strategies