+  MARKET OUTLOOK  

May 22 , 2013:

Reports:

Country Strategy: Thai, 8 May /China & HK, 24 Apr / S’pore, 8 Mar

Global Macro, Asset Strategy: ASEAN, 8 May / 12Apr,Update / US, 20 Mar / 4 Mar,Update

 +   MORNING NOTE  

Daily market commentary

May 22, 2013:

- STI: -0.30% to 3443.9
- JCI: -0.50% to 5188.76
- HSCEI: -0.92% to 11083.2
- Nikkei 225: +0.13% to 15381
- India NIFTY: -0.70% to 6114.1
- SET: +0.00% to 1643.4
- KLCI: +0.58% to 1787.38
- Hang Seng: -0.54% to 23366.4
- ASX200: +0.70% to 3587.9
- S&P500: +0.17% to 1669.2

Market Outlook :

The S&P 500 and DJIA continued to inch up -clocking in a 19th (!) consecutive positive Tuesday as well as fresh highs. We -along with markets- are awaiting with abated breath Bernanke's testimony (Wed 10pm, SGP time) as well as the FOMC minutes (Thurs 2am, SGP time).

Today is a loaded day with 2 key risk events lined up.

Looking ahead, the downward bias for gold is likely to continue to persist on account of the following:

a) ) Key risk event will be Ben Bernanke’s testimonial before the Joint Economic Committee on 22nd May where we will get a better sense of the Fed’s assessment of the US economic outlook and greater clarity on the pace of LSAPs. Do scrutinise the wording of the May FOMC minutes which will be released shortly later after Bernanke’s testimonial. Recall the Fed had previously indicated in its May FOMC statement that the pace of asset purchases could be -either increased or decreased- from the current US$85bn/mth depending on macro conditions.

b) Japan will announce its monetary policy decision today. Reckon BoJ is likely to stand pat after announcing aggressive monetary easing measures in early Apr in view of (a) the Japanese economy humming again with an acceleration in 1Q GDP, better-than-expected readings in manufacturing (PMI at 13-mth high) as well as household consumption and (b) increased inflation expectations. Notwithstanding the possible pause, note the BoJ intends to double(!) the  monetary base in 2yrs (from ¥138tn at end-CY12 to ¥270tn at end-CY14).

STI remains on track to challenge the 3485 level as long as it remains above 3250 key support. Bernanke’s testimonial to Congress on Wed might provide the fillip. Stay nimble!

(All equity indices mentioned in this note are tradeable with Phillip CFDs or ETFs).

MACRO DATA:

In Hong Kong, CPI inflation accelerated faster than expected, gaining 4% y-y in April, following a 3.6% rise in the preceding month, on account of higher food prices.