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Better Data Sparks Change In Global Sentiment
By: Nicholas Tan
Articles (71) Profile

US July retail sales rose for the fourth month by 0.2% m-o-m, better than expected, following a 0.6% gain in the previous month. The increase in consumer spending led DJIA to halt a 2-day decline and rose on 13 Aug, to close at 15,451.01 points. However, the market remains scope-locked on the 18 to 19 Sep FOMC meeting as more than half of economists polled by Bloomberg expect the central bank to start to reduce bond purchases from US$85b to US$65b per month.

Gross domestic product (GDP) in the Eurozone expanded 0.3% in the 3 months through Jun after shrinking for the previous 6 quarters, reversing a change in perception when people did not see a way out of the crisis. The external environment is improving following a year of relative calm on financial markets and has helped the Euro area to recover. Though it is not expected to boom straight away, a growth momentum shift in the 17-nation region will help to offset the drag of China’s slowdown and means a boost for the global economy.

On the local front, Singapore economy grew 3.8% y-o-y in 2Q13, compared to 0.2% in the previous period, on the back of a faster pace of expansion for the wholesale and retail trade, as well as finance and insurance sectors. As such, MTI upgraded GDP growth forecast for 2013 from 1% – 3% to 2.5% – 3.5%.

Jun retail sales dipped 4 percent y-o-y as car sales tumbled. Retailers of motor vehicles reported a 26.9% decline in sales compared to a year ago, as COE quota for the Feb-Jul bidding period was at its lowest in recent years at 19,263. Evidently over the fortnight, Jardine Cycle & Carriage saw its share price performance dropped by $1.21 or 3%, bringing its YTD decline to 17.8% vis-à-vis a 1% rise in the benchmark STI, as the group’s Singapore operations was adversely affected by lower new vehicles quota numbers and government restrictions imposed on vehicle financing.

The STI closed at 3197.53 on 16 Aug.

Well trained in aspects of finance and business, Nicholas oversees the finance and manufacturing sectors at Shares Investment.

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