market

Equity market rebound from a lacklustre August

Spread the love

The market had a relief rebound on Monday, supported by the swinging high of the tech sector as investors look towards the retail sales data. Two counters caught the attention: Nvidia and AMD.

We see softness in the commodity market, and oil retreated largely due to a stronger dollar. We maintain our outperform call on oil despite the generally weaker global demand sentiment simmering on the background.

Retail Sales Data in Focus

The dollar movement may pin now on the incoming retail sales report. Investors are concerned with the durability of consumers’ ability to maintain their spending during inflation.

Market participants generally believe that the food and travel sectors will remain the key beneficiary of consumers’ spending, as wealthier income groups splurged during summer, which could offset lower-income segments’ reduced spending.

FOMC Minutes and Jackson Hole Meeting

We expect the FOMC minutes to show continued concern about inflation by the members despite the improvement seen in CPI. This could mean that the interest rate is likely to remain elevated longer.

Likewise, Uncle Powell will deliver his Jackson Hole speech later this month. It is likely to be hawkish with the laying down of the narrative that inflation is still not convincingly moving down on a sustainable trajectory.

What’s on the menu today?

8.30 pm: Core Retail Sales
11 pm : FOMC Member Kashakari Speaks

It is 15 August, Tuesday, 8.50 am in Singapore and 8.50 pm in New York. As the market rebounded from the recent two consecutive weeks of decline, we remain cautious of the challenges ahead but see meaningful support for major indices at a major support level, with incoming data acting as fresh catalysts after a relatively quiet past week.