Markets Overview

HIGHLIGHTS AHEAD

    The key event today (29 Jul) is centred on the Fed Reserve’s FOMC decision(due at 30 July 2015, 2:00am Singapore time). And while UOB(and the market consensus) is not expecting the Fed to increase ratesin this meeting, and even as this FOMC is without any post-FOMC pressconference by Yellen or review of the FOMC economic projections, themarkets will still pay close attention to the text of the FOMC statementfor any confirmation/insights for the timeline of the first rate hike, specificallyfor the September FOMC. Other than the FOMC decision, theUS data docket is pretty light (as to be expected) and the notable datais just the June pending home sales. As for the rest of the developedeconomies, the data docket is more substantial with Japan July smallbusiness confidence, German August GfK consumer confidence survey,France July consumer confidence, UK June net consumer credit,July CBI reported sales and M4 money supply. Early Thursday morning(30 Jul), we will have Japan June IP, and Japan June vehicle production.

    The US corporate earnings report today will feature Carlyle Group, Hilton,MetLife, Apollo Global management, Facebook and MasterCard.

    The prelim estimates for the 2Q-2015 UK GDP data released onTuesday (28 Jul) showed the UK economy expanded for the tenthstraight quarter and at a faster pace of 0.7%q/q increase (from0.4%q/q in 1Q) even as the y/y growth is likely slower at 2.6%y/y (from2.9%y/y) mainly because of base effects (UK expanded a strong 3%y/yin 2Q 2014). This was exactly the same as the Bloomberg consensus estimates.

    That said, growth in the UK remained lopsided as it was led bystronger services contribution (0.5ppt) thanks to business services andfinance sector while North Sea crude output surged 7.8%, the mostsince 1989. Manufacturing sector declined 0.3% hurt by the strongerpound while construction activity was unchanged.

    The European & US stock markets rebounded on Tuesday (28 Jul) asChinese stocks pulled back from a sharp selloff. US equity snappedback from a five-session losing streak, lifted by a good quarterly earningsreport from UPS and higher US crude prices sparked a rally in USoil majors. The US dollar strengthened against the euro and the yenahead of the FOMC decision in anticipation of more clarity on the firstrate hike timing but it retreated against the pound after a sterling 2QUK GDP report and also against commodity-related currencies as thecommodities prices rebounded. The NZ dollar was the big mover thismorning (29 Jul) as comments from RBNZ Governor Wheeler dampenedexpectations of deep rate cuts. The US treasuries retreated onTuesday after a two-day mini rally as global equity and commodityprices rebounded and price pressure across the curve also came fromthe amount of new debt sales this week. US & global oil prices divergedon Tuesday as Brent fell to the lowest price point since January 2015 onglobal supply glut concerns while US WTI prices climbed higher aheadof Wednesday’s US Department of Energy’s weekly petroleum report.

    Gold price returned to its weak bias on Tuesday as the USD was broadlystronger while there are concerns of a potentially hawkish FOMC statementahead.

    Today, there will be a July consumer sentiment data release out for China and a Bloomberg economicsurvey for South Korea. Indonesia will report June money supply numbers while Thailandwill report car sales for the month of June.