Skip to main content
Weekly Outlook

Weekly Outlook 24 April 2023 – 30 April 2023

Weekly Commentary: 24 April 2023 – 30 April 2023

Major benchmarks ended mixed last week as investors were anticipating for the earnings release for Big Tech companies as they are slated to released their 1st quarter earnings result this week and the results could send major US indexes swinging. New York Fed President John Williams has also signal that the central bank may raise interest rate as inflation is still above Fed’s target of 2% and they will use their monetary policy tools to restore price stability. Consensus on the street suggest that there is greater than 80% change that the Fed will raise rates by a quarter point at its May 2-3 meeting.

ECB has also indicated that they will continue to raise rates over 3% and will only stop after wage growth starts to fall. Hourly labour costs in the EU rose by a record 5.7% in the fourth quarter from a year earlier, exceeding the pace of wage rises in the US. A new future policy decision has also been planned, to guide future rates moves by a combination of inflation forecast, past changes in underlying price pressures and how much impact its policies are having.

Stock returns were lower over the week as observed across the following 3 indices, with the Dow Jones Industrial Average (-0.19%), S&P 500 Index (-0.09%), NASDAQ Composite Index (-0.42%). Other key market indices that generated positives returns consist of Straits Times Index (+0.58%) only. 3 S&P 500 sectors registered losses this week – Information Technology (-0.46%) Communication Services (-3.05%) and Energy (-2.53%). Main outperformers for the week were from subsectors such as Consumer Staples (+1.79%) and Utilities (+2.50%) and Real Estate (+1.59%). 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 2bps to -0.61%, driven by U.S 2-year and 10-year Treasury yields rising 7 bps to 4.17% and 5 bps to 3.56% respectively. Market sentiment also became more risk-off as the U.S. High Yield (HY) – Investment Grade (IG) credit spread tightened 10bps to 3.15% while the CBOE Volatility Index (VIX) has dropped lower by 30 bps to 16.77%.

This coming week, there will be release for first estimate 1st quarter GDP numbers for the US, South Korea and the eurozone. In Japan, there will also be a rate-setting meeting, and investors will be seeing whether they will stick to the decade-long ultra-loose monetary policy or announce a rise of rates as March’s core CPI was higher than expected at 3.8%, its higher y-o-y since 1981.

The global REIT market’s return was varied across the numerous benchmarks. Malaysia NAREIT Index ( -1.86%) and FTSE EPRA Nareit Germany REIT (-1.60%) were the notable REITs that generated negative returns over the past week. Closer to home, the iEdge S-REIT Index (-0.69%) and all of its subsectors generated mixed weekly returns with Healthcare (-2.61%), the notable sector that drop the most  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