Stocks surge to record highs but T-bill yield falls: Weekly Recap

I attended several events in the past week, and there was a sense of exuberance amongst investors everywhere I went. 

After all, the S&P 500 has hit another record high. Closer to home, Singapore’s benchmark Straits Times Index (STI), which has often been seen to be 'lacklustre', also reached a one-year high.  

However, what caught the eyes of many investors was DBS blistering's share price rally to an all-time high, with gains of close to 25% so far this year.

In fact, DBS is just several Singapore blue chip stocks that saw double-digit gains in the first half of the year. We find out if the strong performance of these blue chip stocks would continue into the second half of the year. 

There was also some reason for savers to cheer this week, as the best fixed deposit rate in Singapore has been raised in July.  Likewise, some banks also raised the interest rates on their savings accounts this month. 

Amidst the more positive sentiment, it is important to have a sound financial plan and not jump in simply because of the fear of missing out (FOMO). 

If you are interested to learn how you can start managing your finances better, you can take a first step by checking out our guides to saving well and investing well.

Happy growing!

Gerald, Founder of Beansprout

⏰ This week in markets

🚀 Record highs

What happened? 

The US economy added 206,000 jobs in June, slowing down from the growth in May. At the same time, the unemployment rate rose to 4.1%, providing a further sign that the labour market is cooling. 

This week, Federal Reserve Chairman Jerome Powell also indicated that it has “made quite a bit of progress” in bringing down inflation. 

What does this mean?

With a slowing labour market and greater assurance that inflation is moderating, investors gained confidence that the Fed will cut interest rates in September. 

According to the CME Fedwatch Tool, investors are expecting assigning a 72% probability that the Fed will cut interest rates in September, an increase from 58% just a week ago. 

Why should I care? 

With increasing likelihood of an imminent rate cut, the 10-year US government bond yield fell to 4.29% from 4.47% at the start of the week.

Mirroring lower US bond yields, the cut-off yield on the 6-month Singapore T-bill fell to 3.7% from 3.74% in the previous auction.

US stocks surged to another record high, with gains led by tech stocks. The Straits Times Index (STI) also rose to a 1-year high with greater investor optimism. 

The strength in the Singapore market was supported by banks, as DBS' share price and OCBC's share price reached record highs, while UOB's share price also rose to its highest level in more than 2 years. 

🚗  MOVING THIS WEEK

• Singtel’s associate Bharti Airtel announced that it is raising tariffs by 10-21% for all its prepaid and postpaid users on July 3. The move is an attempt to shore up average revenue per user (ARPU). 
• Cromwell European REIT’s portfolio valuation rose 0.6% at end-Jun 24 compared to that in end-2023. After expected capital expenditure, net valuation is expected to be relatively flat. NAV per unit is estimated at €2.09.
• Tesla posted second-quarter vehicle production and deliveries numbers that beat analyst expectations. The electric vehicle maker delivered 443,956 vehicles in the quarter, an increase of 14.8% compared to the previous quarter, driving greater investor confidence about its prospects in the coming quarters. 

Source: Bloomberg, CNBC, Business Times, Edge Singapore

💡 THE BIG IMPORTANT STORY

T-bill yield falls to 3.7%. Here’s what is driving the decline

The cut-off yield on the latest Singapore T-bill auction on 4 July fell to 3.7%.

🤓 WHAT WE’RE LOOKING OUT FOR THIS WEEK

• Monday, 8 July: Singapore Gross Domestic Product (GDP) data
• Thursday, 11 July: US Consumer Price Index (CPI) data 
• Friday, 12 July: JPMorgan, Citi earnings

Check out the full list of Singapore stocks, REITs and ETFs with upcoming dividend payments with our dividend calendar.

Source: SGX, Bloomberg, Refinitiv

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