Export performance may improve
DATA pipeline this week includes balance of trade, exports and imports data for the month of June as well as producer price index (PPI). The Department of Statistics is expected to announce the external trade data tomorrow and PPI on Wednesday.
Economists expect a trade surplus of RM12.1bil in June and exports to improve as manufacturing and some other industries are almost back to normal operating levels.
In May, Malaysia posted a trade surplus of RM10.41bil, rebounding from a deficit of RM3.63bil in April but overall exports were weaker than expected.
Exports in May tumbled 25.5% to RM62.69bil while imports decreased by 30.4% to RM52.27bil.
Meanwhile, the PPI for local production, which measures the costs of goods at the factory gate, decreased 5.5% year-on-year (y-o-y) in May 2020.
Spotlight on FOMC meeting
THE US Federal Open Market Committee (FOMC) is expected to meet this week.
In this meeting, UOB Global Economics and Markets Research expects the Fed to maintain its policy rate target unchanged at 0%-0.25% and keep its rates near 0% until at least 2022.
The research house expect the next Fed move will be to introduce yield curve caps/targets (YCT) (i.e. yield curve control) to make monetary policy even more accommodative but it will likely be announced in the September FOMC.
The July FOMC may be used to “prepare” the market for a new Fed policy tool.
It will also be a hectic week for the US corporate earnings reporting calendar with more than 180 S&P 500 companies reporting in the week of July 27-31.
Singapore jobless rate
Singapore will kick off this week with the release of its unemployment data for the second quarter, export and import prices as well as PPI for the month of June.
ING Asia said Singapore’s second quarter labour report will be interesting given the strong emphasis in the Covid-19 stimulus on protecting jobs.
The research house expects the jobless rate to rise to 3% from 2.4% in the first quarter.
ING noted that it is still not the worst given the unprecedented economic crisis. The previous record was 4.8% during the SARS pandemic in 2003, followed by 3.3% during the global financial crisis in 2009.
The stimulus measures should keep it from re-testing the SARS level, though ING won’t rule out it breaching the financial crisis high by the last quarter of 2020.
Hong Kong GDP
Lots of data coming out of Hong Kong this week, but gross domestic growth (GDP) will be one whereby investors will be looking out for. Hong Kong’s June external trade data and retail sales for June are also due this week.
IHS Markit said the second quarter GDP update for Hong Kong is expected to show a rapidly deepening recession.
UOB Global Economics and Markets Research expects Hong Kong’s GDP to contract 8.7% y-o-y in the second quarter. In the first quarter, its GDP contracted 8.9%.
Did you find this article insightful?