Weekly recap: US stocks enter correction while T-bill yield bounces

There’s good news and bad news in the financial markets this week, depending on what you are invested in. 

Investors of T-bills have reason to celebrate, as the cut-off yield on the latest 6-month T-bill jumped to 3.95% with lower demand.

On the other hand, stocks and REITs continued their slide as the earnings season go into full swing. And the results have not been pretty so far. 

The upcoming earnings reports will continue to be closely watched, with all eyes on Apple’s results on 2 November. 

The Fed will also be meeting in the coming week, and investors are hopeful that the central bank will not be raising interest rates further for now. 

However, we will also be looking out for whether Fed Chairman Jerome Powell continues to warn that interest rates may stay higher for longer at the press conference.

☹️  DOWNBEAT EARNINGS

What happened? 

Weaker than expected earnings by a handful of tech giants sent US stocks to a 5-month low this week.

What does this mean?

Google’s parent Alphabet led the declines as investors were disappointed by the performance of its Cloud business. This more than offset a recovery in its digital advertising business. 

Facebook's parent Meta warned that it is seeing more volatility at the start of the quarter, and that macroeconomic uncertainty could lead to lower advertising demand. 

However, not all is doom and gloom. Microsoft and Amazon surprised positively on earnings and outperformed their big tech peers. 

Why should I care? 

Companies are facing mixed fortunes as the higher interest rate and uncertain economic environment impact them by varying degrees.

Closer to home, Singapore REITs mostly reported a decline in distributions as higher financing costs take their toll. 

If you are looking to dollar cost average in REITs through ETFs, check out our updated guide to the top Singapore REIT ETFs. 

💡 THE BIG IMPORTANT STORY

Mapletree Pan Asia Commercial Trust's distributions fall again. Here’s what we learnt from its latest results

We review its latest financial numbers to find out what may be driving weakness in its share price.

🚗 WHAT'S MOVING

• UOB reported a core net profit of $1.48 billion in the third quarter of 2023, 5% higher compared to the previous year. The increase in profit was driven by higher net fee income and net interest income. However, its reported net profit was dragged by one-off expenses related to the acquisition of Citigroup’s Malaysia, Thailand and Vietnam consumer banking business.
• CapitaLand Integrated Commercial Trust (CICT) reported that its net property income (NPI) grew by 0.6% in the third quarter compared to the previous year. CICT’s portfolio occupancy increased to 97.3% as at 30 September from 96.6% in June.
• Mapletree Industrial Trust reported distribution per unit (DPU) of 3.32 cents in the second quarter of fiscal year 2023/24, a 1.2% decline compared to the previous year. The lower DPU was driven by a decline in net property income with a weakening of the US dollar and loss of income from non-renewal of leases.
• Mapletree Logistics Trust (MLT) reported a distribution per unit (DPU) of 2.268 cents for the second quarter of FY2023/24, 0.9% higher than the previous year. The higher distribution was driven by the REIT’s resilient portfolio, contributions from acquisitions, as well as divestment gains.
• Frasers Centrepoint Trust (FCT) reported a distribution per unit (DPU) of 6.02 cents for the second half of FY2023, 1.2% lower than the previous year. Its gross revenue rose 1.8% during the period, supported by a high occupancy rate of 99.7% as of 30 September. 

Source: Bloomberg, CNBC, Financial Times, Business Times, Edge Singapore

🤓 WHAT WE’RE LOOKING OUT FOR THIS WEEK

• Monday, 30 Oct: CapitaLand Ascott Trust earnings
• Tuesday, 31 Oct: Paragon REIT earnings, Bank of Japan rate decision, China PMI data
• Wednesday, 1 Nov: ParkwayLife REIT earnings, FOMC rate decision and Fed press conference
• Thursday, 2 Nov: Frasers Logistics & Commercial Trust, SingPost earnings, Apple earnings
• Friday, 3 Nov: AIMS APAC REIT earnings, US non-farm payroll data

Source: Bloomberg, SGX 

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