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Markets Await Manufacturing Data While Ukraine’s Crisis Intensify
Forward, Tradeable | 24 March 2014
By: Raymond Leung
Articles (142) Profile
By: Nicholas Tan
Articles (71) Profile

The FTSE Straits Times Index bucked a downtrend to gained 16.19 points to close Friday’s trading at 3,073.39, despite China showing signs of weakness in data from exports to industrial and the US Federal Reserve Chair Janet Yellen indicating for the first time, that US interest rates could raise as soon as six months after the central bank concludes its monetary easing policy.

Market jitters are expected to turn up a notch for the week after Russian troops stormed a Ukrainian airbase in Crimea over the weekend, while Nato’s top military commander warned of a massive build-up of Russian troops near Ukraine’s border and urged his Western allies to move troops to the east.
In early morning trading, China’s flash Markit/HSBC Purchasing Managers’ Index (PMI) hit an eight-month low of 48.1 in March, down from February’s 48.5, and coming in below market expectation of 48.7.

In Singapore…
• Feb Manufacturing Production Y/Y

February’s manufacturing output will be released on 26 March by the Economic Development Board. For the month of January, Singapore’s manufacturing output rose by 3.9 percent year-on-year (y-o-y) with chemicals and electronics being the main drivers. The chemical sector grew 8.4 percent y-o-y as a new plant that opened last year ramped up their production. Meanwhile, the electronics sector expanded by 7.4 percent y-o-y as output for computer peripherals and other electronic modules increased.

Looking at the stock market, Albedo Limited has caused quite a stir in the market last week due to an article published by The Star. It will be interesting to keep an eye on the company as the saga unfolds. Albedo has since rebutted the Malaysian report of a scuttled reverse takeover (RTO) deal and clarified that the planned RTO deal is still on.

In China…
• Mar PMI Manufacturing (CFLP)
• Mar PMI Manufacturing (HSBC/Markit)

Two manufacturing Purchasing Managers’ Index (PMI) in China will be released this week. The PMI by the China Federation of Logistics and Purchasing (CFLP) will focus on larger companies while the PMI by HSBC/Markit will focus on small and medium-sized companies.

Market watchers fear of a slowdown in the world’s second largest economy as both manufacturing PMI fell to a new low. CFLP’s figure fell near to contraction (below 50) in the month of February to 50.2, hitting an 8-month low. Meanwhile, HSBC’s index sunk into contraction to 48.5, a third month straight decline and 7-month low.

Furthermore, fear of repercussions from the previous massive credit supply looms over the market. Following the default of Shanghai Chaori Solar, yet another Chinese firm failed to meet its debt obligations. Last week, Zhejiang Xingrun Real Estate Company collapsed as they did not have enough cash to repay 3.5 billion yuan worth of debts to creditors which include more than 15 banks. Economists view this as a further sign of economic distress in China and are waiting for the Chinese government to come up with counter measures.

Meanwhile In US…
• Mar Consumer Confidence
• Mar Markit PMI – Services – Flash
• 4Q13 GDP Growth Rate (Final)

Last month, the US market took a small dip when February’s Consumer Confidence index released by the Conference Board fell below consensus. The February figure fell to 78.1 from January’s 79.4 and is below economists’ expectation of 80.0.

Markit will release its flash service PMI for March this week. February’s index took a sharp downturn as it fell to 53.3 from 56.7 in the preceding month. Market watchers believe that the unusually bad winter is the cause of the poor figure. They expect better performance from the index as the sector recorded an increase in backlog of works in February.

The US government will release its final 4Q13 GDP growth rate after slashing its estimate last month. They revised the estimate for the quarter downwards by 0.8 percent to 2.4 percent (stagnation level). Economists will be watching the figures following the optimism showed by the Federal Open Market Committee in the meeting last week.

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This is a co-written article of Shares Investment, which lays out the analytical ideas and thoughts of the authors, who are well versed in investments and market concepts.

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