I appeared on Channel News Asia again this morning at 6:20am SGT. My questions and my responses in the form of brief notes are below:
Q1. The US economy added 223,000 jobs in June, while the jobless rate fell to 5.3% from 5.5%. Is that a solid report?
The headline would suggest so however there is an underlying theme about participation. The U.S. labor force has shrunk and the participation rate has dropped to its lowest since 1977. Therefore there are fewer people looking for full time work and perhaps there are signs of people giving up on securing long term employment.
Q2. So will the US central bank remain patient in raising interest rates?
Yes. I think the recent NFP report is starting to have people think about 2016. September still remains the favourite however there is more momentum gathering about waiting until next year.
Q3. Given the looming Sunday referendum in Greece over the country’s bailout terms, will investors be uneasy to bid stocks higher today in Asia?
With the exception of China, most of Asian markets have enjoyed a solid last few days with strong gains. It is quite likely with the Greece situation still looming, slightly disappointing NFP and a weak U.S. lead that Asian equity markets will ease a little to close the week.
Q4. Will the Greek referendum results have little effect on financial markets on Monday?
Yes I think it will have little effect. The debt repayment deadline and therefore a default happened a few days ago on 30 June and not much happened. The EUR/USD moved a little but then finished where it started. As this saga has gone on for some time now, I don’t expect there to be too much response first thing next Monday.
Q5. The Shanghai Composite index is down 24% from its June 12th peak. Are Chinese stocks cheap after the violent sell-off?
No. China’s market is still up over 100% from a year earlier and obviously that cannot be sustained. There is probably a little more correction needed before normalcy resumes.
Q6. Australian shares rose broadly for a third straight session yesterday. Will the momentum continue today?
Similar to my general comments about Asian equity markets today, I would expect to see some easing today.