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Subject: US market advances on signs of continuous economic growth
Pre-Market Open Commentary for 05 September 2013
( CO. REG. NO.
199904258C )
DJIA: 14930.87 +96.91
Nasdaq Composite: 3649.04 +36.43
Good morning, fellow investors
US stocks extended gains for the second consecutive day on Wednesday
following a series of upbeat economic reports and corporate developments.
US auto sales accelerated at the highest pace since October 2007 with total
sales rising 17% YoY and about 1.9% MoM to 16.1mil with major automakers
posting double digit gains and forecasting more growth in the coming
months. Ford Motor shares advanced 3.5% after reporting sales increase of
12% YoY, the best month since August 2006 while General Motors rose 5.0%
and Toyota rose 1.2% after sales climbed 15% YoY and about 23% YoY
respectively.
The release of the Federal Reserve’s Beige Book indicated that the US
economy continued to expand at a modest to moderate pace with improvements
across all the Fed districts between early July and late August, suggesting
that the economic growth has reached a point where the Fed could pull back
on its asset-purchase program. San Francisco Fed President John Williams
laid down the timeline, indicating that the tapering of bond-buying program
should start later this year and end it mid-2014, on the condition that the
job market recovery continues and inflation edges up to 2%.
However, on a weaker note, the US trade deficit widened slightly more than
expected in July, growing by 13.3% to US$39.1bil as exports dipped, but a
rebound in imports pointed to some firming in domestic demand in early
3Q2013. After adjusting for inflation, the trade gap rose to US$47.7 bil in
August from US$43.8 bil in June, signaling that the trade contribution to
GDP growth is likely to be neutral in the 3Q2013.
On Syria development, President Obama is looking to Russia for support for
his military strike plans on Syria. In Washington, the US Senate foreign
relations panel has passed authorization for the use of military force in
Syria and next week, the President will seek congressional vote on his
military plan.
In anticipation of new product announcements (newest iPhone model) on
September 10, 2013, Apple shares rose 2.0%.
The three major indices logged in the second consecutive day of gains with
the Dow Jones Industrial Average rising 0.65% while the S&P 500 gained
0.81% to close at 1653.08. The Nasdaq rose 1.01%.
On Thursday, market will look to a series of jobs data including Challenger
job-cut report, ADP employment report, jobless claims reports for forward
indication of the key government jobs data on Friday. Other economic data
due on the same day include factory orders and ISM non-manufacturing index.
Crude oil for October delivery pulled back US$1.31 a barrel, or 1.21%, to
settle at US$107.23 a barrel.
In Singapore today:
Singapore shares closed sharply lower on Wednesday as concerns about a
US-led military action against Syria dampened risk appetite. There has been
growing support by key US lawmakers to President Obama’s call for a
military action against Syria for the nation’s alleged use of chemical
weapons against civilians. The latest round of positive data from the PRC
showing growth in China’s services sector failed to lift sentiment. HSBC's
services purchasing manager's index (PMI) climbed to 52.8 in August, up
from an index reading of 51.3 in July and the highest since March, led by
growth in new orders and business optimism as domestic consumption grew. At
closing, the STI index tumbled 39.36 points, or 1.29%, to 3015.42 points.
For every share that rose, 1.9 fell. Turnover was 3.3 bil shares with a
value of $1.3 bil traded.
Cordlife Group announced plans to acquire a 19.92% stake in Malaysian cord
blood banking company StemLife Berhad for RM29.58 mil (S$11.5 mil) and will
pay the deal through a combination of an issue of 8.0mil new Cordlife
shares at $1.30 a share (3.3% of enlarged capital) and a cash payment of
RM2.85mil. The deal will enable Cordlife to capitalise on growth
opportunities in Malaysia, and enlarge its Asian footprint to Thailand
through StemLife's associated company Thai StemLife Co Ltd. Cordlife's
shares fell 6.5 cents to close at $1.355 yesterday.
Market is expected to advance today following a strong overnight close on
Wall Street on signs of continuous economic growth in the US. However,
cautious trading is likely to prevail ahead of key US jobs data scheduled
for release today and tomorrow.
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US market advances on signs 05/09
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