Singapore NODX slump sounds alarm for more downside risk | CMC Markets Daily Commentary
Singapore’s non-oil domestic exports (NODX) – a key manufacturing indicator for the export-reliant economy – has slumped 15.9% in May, extending a 10% decline in April. Heightened trade risk, a cyclical slowdown in the global electronics market, and high watermark a year ago were among the main dragging factors.
Worth noting that electronic NODX tumbled 31.4% yoy, leading the decline in a broad-base export retracement. Geographically, exports to the Greater China area (mainland, Hong Kong and Taiwan) contributed most to the decline. This reading came in line with an 8.5% slump in China’s total imports in May. As trade tensions show no sign of easing soon, a slowing of China’s demand will continue to have big impact to South East Asian economies.
Singapore’s STI opened 0.3% lower this morning, as soft fundamental data dampened investor sentiment. The Jardine group, REITs, technologies and telco companies have all retraced from last week’s high.
Meanwhile, the protest in Hong Kong drew over 2 million people on the street on Sunday, following the government’s decision to suspend the highly unpopular extradition bill. Political risk surrounding HK, although has eased a bit following the step back, will still be a concern for investors.
Central banks are top of the agenda this week, with the Fed, BOJ and BoE all set to announce their interest rate decisions. The Fed is widely expected to keep the base rate unchanged at 2.25-2.50% in the June meeting, and the tone for future policy is more critical to watch. Currency markets saw the US dollar jump nearly 0.5% against major peers last Friday, as industrial production and retail sales data beat forecast. Moving forward, we will probably see more unwinding of immediate rate cut expectations should the Fed disappoint market with a neutral stance this Thursday.
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