Skip to main content
Weekly Outlook

Weekly Outlook 17 April 2023 – 23 April 2023

Weekly Commentary: 17 April 2023 – 23 April 2023

Major benchmarks ended higher last week as inflation pressures receded a bit more than expected.  US inflation eased in March to its lowest level in nearly two years, down from February’s 6% increase and the smallest gain since May 2021. However, inflation remains elevated, well above the 2.1% average in the three years before the pandemic and the FED’s 2% target. High inflation and a tight labour market will lead FED officials to raise interest rates at their next meeting. The benchmark federal-funds rate is now at a range between 4.75%-5% and investors are expecting at least one further rate hike.

China’s goods seemed to have bounced back sharply in March, reflecting greater demand in Asia and Europe as well as improved supply chain conditions. Outbound shipments from China soared 14.8% from a year earlier, reversing the 6.8% decline recorded during the first 2 months of 2023. China does not seem to feel the brunt of the inflation effects as its CPI index rose 0.7% in March from a year earlier, down from a 1% the previous month.

Stock returns were higher over the week as observed across the following 3 indices, with the Dow Jones Industrial Average (+1.20%), S&P 500 Index (0.82%), NASDAQ Composite Index (+0.30%). Other key market indices that generated positives returns consist of MSCI World (+1.30%), Hang Seng Index (+0.53%), and MSCI AC ASEAN Index (+0.83%). Three sectors of S&P 500 registered losses this week –Information Technology (-0.35%) Utilities (-1.34%) and Real Estate (-1.35%). Main outperformers for the week were from subsectors such as Industrials (+2.10%), Energy (+2.50%), and Financials (+2.86%). For 2022 as a whole, index returns were negative for the Dow Jones Industrial Average (-8.78%), S&P 500 (-19.44%), and the NASDAQ Composite (-33.10%).

The yield-curve remains inverted as the 10Y-2Y US Treasury spread widened 18bps to -0.59%, driven by U.S 2-year and 10-year Treasury yields rising 27 bps to 4.11% and 8 bps to 3.51% respectively. Market sentiment also became more risk-on as the U.S. High Yield (HY) – Investment Grade (IG) credit spread tightened 46bps to 3.05% while the CBOE Volatility Index (VIX) has dropped lower by 253 bps to 17.07%.

This coming week, China will release its first-quarter GDP report, and investors will weigh whether they can achieve the target for annual growth of 5%, a conservative estimate compared with the breakneck speed seen in previous years. UK will also release its PMI and unemployment figures for March, and the outlook for inflation.

The global REIT market’s return varied across numerous benchmarks. Malaysia NAREIT Index ( -0.51%) and MSCI US REIT (-1.95%) were the REITs that generated negative returns over the past week. Closer to home, the iEdge S-REIT Index (+0.48%) and all of its subsectors generated positive weekly returns with Office (-0.02%), the only notable sector that dropped last week. REITs generally have been affected by decreasing yield spread as interest rates surged and investors price in the possibility of reduced distributions stemming from higher financing costs. However, we do expect inflows to return to the sector given the existing attractive valuations on offer and resilience offered by the REIT asset class in light of the waning global growth outlook.

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