SingTel and DBS deliver results, Oil rebounds | CMC Markets Daily Commentary
Singapore Telecommunications delivered lower-than-expected 3Q results this morning, with net profit falling 23.8% to S$ 627.2 million vs. a year ago. Quarterly revenue dropped 5% vs. a year ago to S$ 4.35 billion, due to weaker business sentiment, lower equipment sales and continued price erosion amid intensified competition.
Singapore’s largest lender – DBS Group – has released upbeat 4Q results and boosted its dividend payment by 10% today. The bank’s quarterly and full year profit jumped 14% vs. a year ago, and return-on-equity hit a record high of 13.2%.
Looking ahead, 2020 might be a challenging year for Singapore banks, as NIM is expected to contract on lower interest rates, and loan growth may struggle to gain momentum. Recent Covid-19 outbreak in China and HK posts earnings risk in the first quarter of 2020 and may lead to higher credit cost.
US equity futures dropped at the Asian open, as the number of new cases and death of Covid-19 soared in Hubei – the epicentre of virus outbreak – due to a new method of diagnosis. The number of infected cases in Hubei rose nearly 15,000 on 12 Feb, and the death toll hit 1,355 after 242 reported new cases from Hubei.
The surging number of cases in Hubei adds uncertainty to controlling the epidemic, weighing on market sentiment across Asia Pacific.
AUD and NZD fell from yesterday’s highs, whereas JPY and CHF are leading gains among G10 currencies. This suggests the market is in risk-aversion mode.
Crude oil price let go some of yesterday’s gain, with Brent trading around the US$ 56.46 area. Technically, a key level at US$ 54.1 (161.8% Fibonacci Extension) was tested this week and is likely to become an immediate support. Overall trend still remains bearish as its SuperTrend (10, 2) remains downward sloped. Catalysts such as OPEC+ cut is needed for the oil market to make a turnaround.
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