5 things to know before the Singapore market opens this week: Jan 25-31

A pumpjack sits on the outskirts of town at dawn in the Permian Basin oil field on Jan 21, 2016, in the oil town of Midland, Texas.
A pumpjack sits on the outskirts of town at dawn in the Permian Basin oil field on Jan 21, 2016, in the oil town of Midland, Texas. PHOTO: AFP

1. Has oil hit bottom?

If global stock markets have see-sawed in the first three weeks of 2016, oil has been on a roller-coaster ride. Prices were heading for a 17 per cent drop in January - the largest slide in the first month of the year in at least a quarter of a century - until they rebounded by 12 per cent in the last two trading days of the past week (9 per cent on Friday).

Both Brent and US crude closed above US$30 a barrel on Friday after swooning to 13-year lows below US$28. Analysts say money managers taking profit on their huge bets against oil were mainly responsible for oil's bounce.

But will prices continue to recover or go lower?

As Reuters pointed out, the world is still producing some two million barrels of oil a day more than it uses and the risk remains, as the International Energy Agency said last week, that the oil market is "drowning in oversupply".

2. Singapore's falling consumer prices

Inflation expectations for Singapore have fallen to an all-time low as jitters grow over a global economic slowdown and its impact on the local economy, a survey showed last week.

Singapore's consumer price indices for December are out on Monday, with economists polled by Reuters expecting the headline inflation figure or all-items CPI to fall 0.7 per cent from a year ago, for the 14th straight month of decline, dragged down by falling housing and transport costs.

The core inflation measure - stripping out accommodation and transport prices - is forecast to have inched up 0.2 per cent year-on-year in December - steady with November and near a five-year low set in May when core CPI rose 0.1 per cent.

If the inflation data comes in lower than expected because of plunging oil prices, it will raise speculation again that the Monetary Authority of Singapore (MAS) will move to ease the Singapore dollar at its next policy review in April.

Other key Singapore data out later this week: industrial production for December on Tuesday, preliminary fourth quarter unemployment figures on Thursday and business expectations for the first quarter from the services & manufacturing sectors on Friday.

3. Fed and US GDP

The Federal Reserve will meet this week for the first time since raising interest rates in December, but no one is expecting another rate rise so soon.

Since December, US economic data has not been encouraging and US stock markets have gone on a wild ride along with the rest of the world on fears over China's economy and crashing oil prices. Some Fed watchers are pushing back the timing of the next rate rise all the way to September. But Thursday's Fed rate statement will have markets carefully assessing for clues on the potential pace of US rate increases.

Also to be watched closely is Friday's first reading of US fourth quarter GDP - for whether or not the US economic recovery is flagging.

4. BOJ easing?

The Bank of Japan has two-day meeting this week that ends on Friday and expectations are high the central bank will expand its already record asset purchases to weaken the yen.

Concern about a slowdown in China's economy and oil prices tumbling to 13-year lows have triggered risk aversion, sending global stocks tumbling this year and boosting the yen and euro as haven assets.

But stocks bounced on Friday after hints that the European and Japanese central banks are getting ready to act to counter their strengthening currencies.

Last week, the Nikkei Asian Review reported that BOJ Governor Haruhiko Kuroda is considering easing moves while the Wall Street Journal said an aide to Japanese Prime Shinzo Abe said last Thursday that "conditions for additional easing have fallen into place."

5. What about the ECB

European Central Bank (ECB) president Mario Draghi also seems to preparing the ground for expanded monetary stimulus for the third time in a year as China's economic slowdown and market turbulence and crashing oil prices threaten the euro zone's recovery.

Mr Draghi said last Thursday that the ECB will review its programmes at the next policy session in March and there were "no limits" on how far they're willing to deploy measures within their mandate.

An ECB quarterly survey published on Friday showed external analysts cut their inflation outlook for this year and next, backing the case for more stimulus.

For more clues as to how likely the ECB will act in March, investors will be looking at a preliminary reading of consumer prices in the euro zone due on Friday.