5 things to know before the Singapore market trades this week: June 29-July 5

Greek Prime Minister Alexis Tsipras seen on television addressing the nation.
Greek Prime Minister Alexis Tsipras seen on television addressing the nation. PHOTO: REUTERS

1. Zero hour for Greece

Greek banks will stay shut on Monday and capital controls will be imposed, Prime Minister Alexis Tsipras announced late on Sunday, pleading for calm after anxious citizens emptied cash machines in a dramatic escalation of the country's debt crisis.

The drastic measures announced by Tsipras topped off a weekend of high drama that began with the leftist premier's unexpected call for a July 5 referendum on creditors' latest reform proposals after bailout talks in Brussels collapsed. In response, angry European Union and International Monetary Fund creditors rejected a request to extend the nation's bailout beyond its expiry date on Tuesday, sparking fears Greece could default on a key 1.6 billion euros (S$2.4 billion) debt payment to the IMF due the same day and possibly crash out of the eurozone.

2. US jobs report also key

Greece aside, the week's focus is likely to be the US non-farm payrolls report on Thursday and the ADP private sector jobs data on Wednesday, as markets look for signs that continued growth in the world's biggest economy is boosting employment and wages.

Federal Reserve chair Janet Yellen emphasised after the US central bank's June 16-17 meeting that any decision to lift interest rates would depend on "more decisive evidence" that labour markets were healing, and that wages would increase beyond their current "subdued pace".

The Fed is expected by economists to hike rates in September for the first time in almost a decade.

Economists polled by Reuters expect the payrolls figure, which comes on Thursday this time because of the US July 4 Independence Day holiday, to show the US economy added 232,000 jobs in June after May's unexpected 280,000 surge, which cemented rate hike expectations.

Wednesday's ADP National Employment Report is expected to show 218,000 jobs added compared with 201,000 in May.

Last month's payrolls report showed hourly wages rose 2.3 per cent, the strongest since August 2013 but still far short of the 3-4 per cent wage gains Yellen has said she would see as signalling a healthy job market.

3. China in focus after rate cuts

As the Wall Street Journal put it, China's central bank blinked over the weekend, cutting interest rates on Saturday to stop a massive stock selloff last week, triggered by its own attempts to cool a red-hot market fuelled by massive amounts of borrowing.

On Friday the Shanghai Composite index dropped 7.4 per cent, and two-thirds of the listed stocks hit their 10 per cent daily downward limit. Since June 12 intraday peak the index has lost 19 per cent.

Beijing is playing a precarious balancing game as a stock market in free fall could tip the economy into a deeper slide.

4. URA data expected to show Singapore private home prices still cooling

On Wednesday, the Urban Redevelopment Authority will release its advance private property index for the second quarter. Analysts have told The Straits Times that private home prices probably shed a further 2 per cent in this April-June from the first, with buyers continuing to hold off purchases for as long as hard-hitting cooling measures stay firmly in place.

5. Inflation and PMI data on the way

With the European Central Bank continuing to pump billions into the economy each month, Tuesday's flash reading of eurozone inflation will give an indication of whether the massive stimulus is succeeding in spurring growth and prices.

Economists polled by Reuters predict a June reading of 0.2 per cent year-on-year - lower than the 0.3 in May, when inflation surprised on the upside after five months of falls and stagnation, It is far from the ECB's near 2 per cent target.

A continuing trend of weak inflation is the biggest threat to expectations that global interest rates will start to rise. Inflation was flat in the United States in May and just 0.1 per cent in Britain - seen as the next most likely candidate to lift borrowing costs, early next year - even though global oil prices have jumped in recent months.

A slew of monthly Purchasing Managers Index surveys this week, which gauge private sector economic activity, will also provide a steer on how the eurozone and other economies are faring.

Sources: REUTERS, Wall Street Journal