The stock market experienced another day of impressive gains last Friday, driven by the strong performance of technology stocks. The NASDAQ 100, known for its tech-heavy composition, came close to achieving a remarkable 40% gain in the first half of the year. In a historic milestone, Apple’s market capitalization surpassed the $3 trillion mark, making it the first company to achieve this feat. However, not all stocks fared well, as Nike faced a decline in its earnings report, leading to a drop in its stock value.
What you need to know
Last week, the labor market reinforced its strength, as jobless claims data indicated tightness, and the Q1 GDP received an upward revision. As a result, the market’s anticipation of a rate hike in July rose to over 80%. The softer US PCE inflation data provided some relief to the markets. However, it did not significantly impact the market’s expectations regarding the Federal Reserve’s future actions. The focus remains primarily on labor market indicators, which continue to play a crucial role in shaping the market’s anticipation of the Fed’s decisions.
The US economy has pleasantly surprised on the upside recently, and this week will serve as another test as the ISM survey results are reported. While manufacturing has been weakening, the services sector has been instrumental in keeping the economy afloat. However, the services PMI is now hovering just above the 50-mark, and a drop below 50 could raise concerns about an economic slowdown. The ISM manufacturing report will be released today, followed by the ISM services report on Thursday.
What’s happening in Singapore
As the US yield curve continues to raise concerns and the possibility of a recession looms, market participants are closely monitoring the performance of various sectors, with REITs appearing as potential beneficiaries of the shifting economic landscape. Moreover, REITs with exposure to the industrial and logistics sector might enjoy positive rental reversions, investors can look forward to attractive dividend yields of around 7-8% from these REITs.
The Monetary Authority of Singapore (MAS) has announced a proposed increase in deposit insurance (DI) coverage to align with the growth in average deposit balances. According to MAS, this adjustment aims to ensure that the vast majority of smaller depositors will continue to enjoy full coverage, maintaining the primary objective of safeguarding small depositors in the unfortunate event of a bank failure. As a result of this change, it is estimated that 91% of all depositors will be fully covered by DI.
By enhancing the level of DI coverage, MAS aims to instill confidence in Singapore’s banking system and provide greater peace of mind to depositors, particularly those with smaller balances. The proposed adjustment serves as a testament to MAS’s ongoing commitment to protecting the interests of depositors and maintaining the stability of the financial sector.