Market Overview

Singapore

Straits Times Index (STI) is a market capitalisation weighted index that tracks the performance of the top 30 companies listed on SGX.

With job vacancies growing in Q1 of 2024, as compared to Q4 of 2023, signaling that the overall economy still remains strong.

A survey conducted by ManpowerGroup Singapore released on 11 Jun, shown that amongst the 525 employers polled, about 44% said they intend to hire during Q3 of 2024, while 24% anticipate a decrease of staff level, while 32% do not expect any change

The net employment outlook, which is used as an indicator of labour market trends, is calculated by subtracting the percentage of employers who anticipate reductions in staffing levels from those who plan to hire, Indicating that while hiring growth is slowing there is a higher percentage of employers who plan to hire than those who anticipate reductions.

With the 3,300 continues to remain a key level in the near term, the index is facing profit taking after the recent rally.

With the 20d MA flattening out, any break below the key level may show weakness in the near term, while with longer term moving average still signaling that longer term uptrend is intact.

Opportunities to get in on the dips could be present as we continue to monitor if bargain hunting returns.

Hot News (Click to read):

• Fed rate cuts, ‘reverse globalisation’ may spur relatively undervalued Singapore, Asian stocks (The Business Times)

• Latest Singapore 6-month T-bill offers cut-off yield of 3.74% (The Business Times)

Dow Jones Industrial Average (DJIA) tracks the daily price movements of 30 large, public-owned blue-chip American companies.

The index continues to trade within the bounds of 38,000 - 40,000 levels, with temporary resistance level around the 39,000- 39,200, attempting to hold above the 20d MA, and testing the temporary levels, upward momentum toward 40,000 level could be expected where sellers are likely to appear once more.

S&P 500 Index is a market-capitalization weighted index of the 500 leading companies in the US which is widely considered as one of the best gauge of the US economy.

The index quickly broke above the 5,400 within less than a week after breaching the 5,300, briefly testing the 5,500 psychological resistance level, with the moving averages still indicating strength, more upside potential present as long as the 5,400 level remains intact.

The enthusiasm surrounding artificial intelligence continued to propel the market significantly this year even as investors grappled with shifting expectations for rate cuts and a slowing economy.

The S&P 500 has gone 377 days without a 2.05% sell-off. making it the longest stretch for the benchmark since the great financial crisis, according to FactSet data compiled by CNBC.

The index hasn’t experienced a gain of at least 2.15% in that time either.

Hot News (Click to read):

• The stock market is in its longest stretch without a 2% sell-off since the financial crisis (CNBC)

• 10-year Treasury yield rises after release of fresh inflation and consumer data (CNBC)

Singapore Stocks Spotlight

SATS LTD (S58.SI)
Target Price: S$3.20

About SATS Ltd

• Top provider of gateway services and food solutions in Asia, dominates the in-flight catering and ground-handling services at Singapore's Changi Airport

• The Food Solutions segment provides in-flight and institutional catering, food processing, distribution services, and airline laundry services.

• The Gateway Services segment offers both airport and cruise terminal services.

Fundamental

• As the world’s largest ground and air cargo handler by cargo tonnage, it operates over 215 stations in 27 countries and holds a major market share at several key airports.

• Increasing global air cargo volumes and steady growth in air passenger traffic are expected to boost earnings.

• The acquisition of WFS is also expected to bring operational and financial benefits in the coming years. We anticipate SATS’s core EPS to reach 19.2 cents in FY26, about 85% of FY19’s level.

Technical

• Price has consolidated sideways between 2.40 to 2.85-2.90 since Mar 2023 and has recently broke above the upper bound

• Sellers returned near the psychological resistance around 3.00

• Longer term moving averages intersecting, if 100d MA crosses above the 200d MA, there is more confirmation that the uptrend is forming

• Upside toward 3.20, if price can hold firmly above 3.00

SINGTEL LTD(Z74.SI)
Target Price: S$3.00

About Singtel Ltd

• Singapore Telecommunications Ltd. is an investment holding company that provides telecommunications systems and services.

• Group Consumer segment offers mobile services, pay TV, fixed broadband, voice services, and equipment sales.

• Group Enterprise segment provides mobile services, equipment sales, fixed voice and data, managed services, cloud computing, cyber security, IT, and professional consulting.

Fundamental

• Holding significant stakes in telecom companies in India, Indonesia, the Philippines, and Thailand, which contributed over 67% of Singtel's operating profit in FY24.

• Divestments and potential telecom consolidations in Singapore could be significant catalysts

• Excluding the impact of divestments, potential growth of the company’s core operating profit of around 5%

Technical

• Prices broke above the 2.55 resistance level previously, forming a new support, with the 20d MA close to this level as well

• The 100d MA crossed over the 200d in May, forming a longer term uptrend as prices rallied higher

• Immediate resistance around 2.70-2.75 where if prices are able to push past this level, could see upside toward the 3.00 level

ST ENGINEERING (S63.SI)
Target Price: S$4.60

About ST Engineering

• Singapore Technologies Engineering Ltd provides solutions and services in the aerospace, electronics, land systems, and marine sectors

• Operates through the following business segments: Commercial Aerospace, Urban Solutions and Satcom and Defence and Public Security

Fundamental

• Revenue surged 11.8% to S$10.1b, with growth across all segments

• Operating profit rose 24.4% to S$914.7m, despite a divestment loss

• Generated positive free cash flow of S$562.6m, reversing prior year's outflow of S$293m

• Net profit grew 9.6% to S$586.5m, despite a 53% increase in finance costs due to higher interest rates

Technical

• Higher lows continue to form as prices rebounded from the 100d MA for the third time since Apr 24, indicating buying interest still present

• Support level is around 4.00-4.05 where bargain hunting previously returned

• If price can hold firmly above 4.30, potential upside toward 4.60

United States Stocks Spotlight

ELI LILLY AND CO (LLY.NY)
Target Price: US$1,000

About Eli Lilly and Co

• Eli Lilly and Company discovers, develops, and markets human pharmaceuticals worldwide

• Company overtook the market leader last year and is currently one of the most valuable drug producers in the world

• Top 3 Drugs include Diabetes drug Trulicity, breast cancer drug Verzenio, and diabetes drug Mounjaro

• New drugs in focus are Weight-loss Drug Zepbound, and Alzheimer's disease Donanemab

Fundamental

• Donanemab will be the second drug on the market to treat Alzheimer's disease if approved

• Posted another strong earnings report

• Q1 non-GAAP EPS of $2.58 topped Wall Street estimates of $2.49 while revenue of $8.77b, up 26% from year-ago levels, was a slight miss

• Anticipating 2024 full-year revenue to come in at $2.0b with operating EPS to be in the range of $13.50 to $14.00, sharply higher than the $12.46 consensus

Technical

• Price has hit our May 24 Newsletter target price of 880, where long term uptrend still remains intact, with 880 resistance turned to become a support

• All 3 MAs are still heading higher indicating strength

• Near term resistance around 920

• Potential upside toward 1,000 first, if upside momentum continues to hold

COLGATE-PALMOLIVE COMPANY (CL.NY)
Target Price: US$105.00

About Colgate-Palmolive Company

• Colgate-Palmolive manufactures and sells a wide range of consumer products globally, focusing on oral, personal, and home care as well as pet nutrition

• The company's extensive brand portfolio includes Colgate, Darlie, Palmolive, and Hill's, catering to diverse consumer needs

Fundamental

• Achieved organic sales growth across all product categories and divisions, driven by volume and pricing increases

• Maintained market leadership in oral care, personal care, and home care segments, with toothpaste commanding a 41% market share and manual toothbrushes at 31.5% globally

• Recently raised dividend by 4%, reflecting Colgate's commitment to consistent dividend growth and providing stability amid market fluctuations

Technical

• Price has achieved our target price of 94.00 in our May Newsletter and continued to push higher, with longer term uptrend intact

• 90.00 psychological level continues to be a key level with the 100d MA hovering around that level with prices rebounding from it

• Approaching the 100.00 key psychological level, if prices are able to break and hold firmly above this level upside toward the 105.00 level possible

APPLE INC (AAPL.NQ)
Target Price: US$240.00

About Apple Inc

• Apple Inc. designs, manufactures, and markets smartphones, personal computers, tablets, wearables, and accessories worldwide

• In addition, the company offers various services, such as Apple Arcade, Apple Fitness+, Apple Music, Apple TV+, etc

Fundamental

• Apple’s agreement with OpenAI to integrate ChatGPT might spur a massive upgrade cycle among users

• Apple reported quarterly revenue of $90.8 billion for Q2 2024, down 4% year-over-year.

• Earnings per diluted share were $1.53.

• The board authorized an additional $110 billion for share repurchases.

• Quarterly dividend was raised by 4% to $0.25 per share.

Technical

• After the 200 psychological level gave way, prices swiftly pushed higher, turning from a resistance to a support

• 100d MA approaching the 200d MA, where could see a longer term trend reversal

• Short-term uptrend remains strong with 20d MA still heading up

• Potential price consolidation under the 220 resistance level before attempting to break higher

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