SG Market (05 Dec 14)

[US] Market Wrap US stocks dipped slightly from the previous day’s record levels, weighed by disappointing comments from ECB’s President Mario Draghi, who brushed aside pressure for immediate monetary policy action. The key US indices all inched down 0.1%, with the DJIA ending at 17,900, S&P 500 at 2,072 and Nasdaq at 4,769. ~6.0b shares changed hands, compared to the three-month average of ~6.6b shares. Investors were left disappointed after Draghi announced that the ECB will wait till the next quarter before assessing if more monetary easing measures were required. This put the brakes on speculation that the central bank was poised to begin quantitative easing measures. Draghi also announced lower forecasts for inflation and growth, and cautioned of a deflationary spiral. In economic data, initial jobless claims dropped by 17,000 to a seasonally adjusted 297,00 for the week ending 29 Nov, slightly higher than the forecast for 295,000 claims. Tonight, eyes will be on other jobs data, including change in nonfarm payrolls (consensus: 230k) and unemployment rate (consensus: 5.8%). After three days of gains, energy stocks resumed their slump, declining 0.8% as a group. Oil price dropped 1%, after Saudi Arabia said it will offer Asian customers the biggest discount on its crude in at least 14 years. Chevron and Exxon Mobil fell 1.3% and 0.6%, respectively to pace decliners in the Dow, while ConocoPhillips slipped 2.1%. Newfield Exploration and Ensco declined more than 3.5%. Among other stocks in focus, Microsoft advanced 1.6% after Barne & Noble (-5.4%) agreed to buy the tech giant’s stake in Nook Media for US$125m. Microsoft also benefitted from a price target hike by Nomura, which upped its estimate by US$6 to US$56. The house reiterated its Buy call, predicting larger share buybacks as a catalyst. Sears tumbled 4.4% after the department-store chain unveiled its 10th straight quarterly loss, dragged by dwindling sales. Selling pressure could resume for the Singapore O&M plays, after the US oil majors tumbled last night. Saudi Arabia said it will sell its crude oil to Asia at a discount of US$2/bbl against the regional benchmark, leading observers to believe that oil could see continued price pressure as the oil producing nations battle to keep market share. Meanwhile, the tepid broader US market overnight, as well as weaker Asian futures this morning, point to a muted open for the Singapore market. In the region, the Nikkei is down 0.4% and the Kospi trading 0.1% lower. From a chart perspective, expect the Singapore market to test the next support at 3,271 (50 day moving average), if the psychological 3,300 support is broken. Stocks to watch: *STI: Constituents remain unchanged after quarterly review *SGX: Entered into a letter of intent with Japan Exchange to collaborate on the joint development and promotion of the markets on both exchanges, particularly in the derivatives and IT area. *SIIC Environment: Seeking to raise between $98m and $101m, via an offering of 660m shares (6.9% of shares out) at between $0.149 and $0.153 per share, according to a termsheet. *Hankore: Request for trading halt pending announcement of results of the SGM to be held today. Shareholders are expected to approve its RTO deal with China Everbirght Int’l. *Miyoshi Precision: Diversifying into the manufacture and sale of light electric vehicles in China, with the increase in equity in its Green Galaxy JV to 55% (from 5.1%). The JV, which will focus efforts in Yingtan in Jiangxi Province, has established factory operations, and secured maiden round of sales post-opening of its sales showroom in Nov. *Chiwayland: Entered into a non-binding MOU with an Australian property company to explore a possible JV for project development in Sydney. *United Fiber: Updates that PT Dian Swastatika Sentosa Tbk shareholders will vote on the reverse takeover of United Fiber at an EGM on 8 Dec. Recall, the deal involves the proposed $1.88b acquisition of a 67% stake in PT Golden Energy Mines Tbk in exchange for 1.98b new United Fiber shares. *Oceanus: Appointed new management, Peter Koh (CEO), and Matthew Tan Kim Chuan (Chief Risk and Chief Technology Officer).