Skip to main content
Weekly Outlook

Weekly Outlook 28 November 2022 – 4 December 2022

Weekly Commentary: 28 November 2022 – 04 December 2022

Stocks have mostly ended higher last week where value stocks as loosely represented by the Dow Jones Industrial Average (+1.80%) continued to lead in front of the S&P 500 Index (+1.56%) and the NASDAQ Composite Index (+0.73%). Other key market indices have also managed to report positive weekly gains, except for the STI (-0.85%) and the Hang Seng Index (-2.27%%). The Hong Kong stock market was sent lower amid the unrest in China over its continued zero-COVID policy. All eleven S&P 500 sectors are in the positive as well where Energy (+0.26%) and the growth sectors such as InfoTech (+0.99%) and Communication Services (+1.01%) relatively underperformed. Energy’s lagged as oil futures in the WTI and Brent crude fell to near 2022 lows. Meanwhile, Utilities (+3.13%), Materials (+2.98%), and Financials (+2.19%) were the best-performing sectors as the market continued to be cautious amidst the current rising interest rate environment and global economic slowdown.

The yield-curve continued to be inverted as the 10Y-2Y US Treasury spread inversion further widened by 6 bps to -0.79% last week although both the U.S 2-year and 10-year Treasury yield fell by 9 bps to 4.43% and by 15 bps to 3.64% respectively. The stock market was still on risk-on mode as the U.S. High Yield (HY) – Investment Grade (IG) credit spread continued to contract by 10 bps to 3.05% and the CBOE Volatility Index (VIX) also cooled down by 262 bps to 20.50% by Friday.

Market focus next will be mainly on the release of new economic data such as the U.S. November’s jobs reports and the Fed’s preferred inflation gauge – October’s Personal Consumption Expenditure (PCE). Powell is also scheduled to discuss the U.S. economy and the labor market on Wednesday where investors will try to derive further hints on the next December’s rate hikes and beyond. Many are hoping that the Fed will ease its tightening pace given the weakening economy and the stock market rally will continue if this is the case, but ultimately inflation is still staggering high globally although recent data has shown deceleration in some key markets. In October, the U.S. core CPI decelerated by 0.3 pp MoM to 6.3% YoY while headline CPI also slowed down by 0.5 pp MoM to 7.7% YoY. The Fed’s preferred inflation gauge – the U.S. Personal Consumption Expenditure (PCE), has its headline rate unchanged at 6.20% YoY in September, but core PCE climbed by 0.20 pp to 5.10% YoY, well above the Fed’s target range of 2%. In Singapore, both the CPI and MAS core inflation in October have slowed by 0.8 pp and 0.2 pp MoM to 6.7% and 5.10% YoY respectively. Furthermore, 3Q22 earnings updates have mostly been positive and have lifted market sentiment in the past few weeks. Around 94% of the S&P 500 companies have reported actual results for 3Q22 where around 71% and 69% of them have reported positive revenue and earnings surprise respectively.

As can be seen below, most of the global REIT markets delivered mixed returns but yield spreads remained positive overall. Back at home, the iEdge S-REIT Index’s (+0.97%) and its subsectors ended the week lower with the exception of Hospitality (+0.01%). Specialized (-0.43%) or pureplay DC SREITs have also held up better compared to the rest. On the other hand, Healthcare (-4.34%), Office (-2.70%), and Industrial (-2.61%) were the worst-hit subsectors for the week. REITs overall have been affected by decreasing yield spread as interest rates surged and investors pricing in the possibility of reduced distributions from the increased financing costs, but we do expect inflows to return to the sector when market sentiment brightens and due to the more attractive valuations and yields.

Important Information

This material is provided by Phillip Capital Management (S) Ltd (“PCM”) for general information only and does not constitute a recommendation, an offer to sell, or a solicitation of any offer to invest in any of the exchange-traded fund (“ETF”) or the unit trust (“Products”) mentioned herein. It does not have any regard to your specific investment objectives, financial situation and any of your particular needs. You should read the Prospectus and the accompanying Product Highlights Sheet (“PHS”) for key features, key risks and other important information of the Products and obtain advice from a financial adviser (“FA“) before making a commitment to invest in the Products. In the event that you choose not to obtain advice from a FA, you should assess whether the Products are suitable for you before proceeding to invest. A copy of the Prospectus and PHS are available from PCM, any of its Participating Dealers (“PDs“) for the ETF, or any of its authorised distributors for the unit trust managed by PCM.

An ETF is not like a typical unit trust as the units of the ETF (the “Units“) are to be listed and traded like any share on the Singapore Exchange Securities Trading Limited (“SGX-ST”). Listing on the SGX-ST does not guarantee a liquid market for the Units which may be traded at prices above or below its NAV or may be suspended or delisted. Investors may buy or sell the Units on SGX-ST when it is listed. Investors cannot create or redeem Units directly with PCM and have no rights to request PCM to redeem or purchase their Units. Creation and redemption of Units are through PDs if investors are clients of the PDs, who have no obligation to agree to create or redeem Units on behalf of any investor and may impose terms and conditions in connection with such creation or redemption orders. Please refer to the Prospectus of the ETF for more details.

Investments are subject to investment risks including the possible loss of the principal amount invested, and are not obligations of, deposits in, guaranteed or insured by PCM or any of its subsidiaries, associates, affiliates or PDs. The value of the units and the income accruing to the units may fall or rise. Past performance is not necessarily indicative of the future or likely performance of the Products. There can be no assurance that investment objectives will be achieved. Any use of financial derivative instruments will be for hedging and/or for efficient portfolio management. PCM reserves the discretion to determine if currency exposure should be hedged actively, passively or not at all, in the best interest of the Products. The regular dividend distributions, out of either income and/or capital, are not guaranteed and subject to PCM’s discretion. Past payout yields and payments do not represent future payout yields and payments. Such dividend distributions will reduce the available capital for reinvestment and may result in an immediate decrease in the net asset value (“NAV”) of the Products. Please refer to <> for more information in relation to the dividend distributions.

The information provided herein may be obtained or compiled from public and/or third party sources that PCM has no reason to believe are unreliable. Any opinion or view herein is an expression of belief of the individual author or the indicated source (as applicable) only. PCM makes no representation or warranty that such information is accurate, complete, verified or should be relied upon as such. The information does not constitute, and should not be used as a substitute for tax, legal or investment advice.

The information herein are not for any person in any jurisdiction or country where such distribution or availability for use would contravene any applicable law or regulation or would subject PCM to any registration or licensing requirement in such jurisdiction or country. The Products is not offered to U.S. Persons. PhillipCapital Group of Companies, including PCM, their affiliates and/or their officers, directors and/or employees may own or have positions in the Products. This advertisement has not been reviewed by the Monetary Authority of Singapore.

Leave a Reply