Five things to note about the Singapore stock market this week

A woman walks past a stock market board. -- ST PHOTO: BRYAN VAN DER BEEK
A woman walks past a stock market board. -- ST PHOTO: BRYAN VAN DER BEEK

SINGAPORE - This could be a bad week for investors. Hanging over the market, like a Halloween spectre, is the ghost of Black Tuesday, the biggest Wall Street crash ever that took place on Oct 29, 1929, marking the start of the Great Depression.

Indeed, markets took a shelling two weeks ago, sparking nervous commentary among analysts that Halloween had come early.

But Wall Street has since recovered and on Friday capped its best week in two years.

Still, investors are likely to tread cautiously this week because of the following 5 things that might spook the market:

1. The Straits Times Index is 1.65 per cent down from the end of September.

The local benchmark will have to rise by over 54 points this week in order to eke out a gain for the month.

But CMC Markets analyst Desmond Chua is optimistic: "I think the better-than-expected ECB stress tests results will go down well with the local market. We'll also be looking out for the Fed announcement on its bond-buying, or quantitative easing (QE) programme. If we see an extension of QE, which has been recently considered, then we might just see a market rally. Otherwise, the market should react quite calmly as tapering is priced in."

2. That ECB health-check test

Roughly one in five of the euro zone's top lenders failed the health checks at the end of last year but most have since repaired their finances, the European Central Bank said on Sunday. But while 25 of the euro zone's 130 biggest banks failed - with a total capital shortfall of 25 billion euros - a dozen have already raised 15 billion euros this year to make repairs.

3. The Federal Reserve is due to announce its monetary policy at 2am on Thursday (local time) after a two-day meeting of the US central bank's Federal Open Market Committee (FOMC).

Market observers will be watching this closely to see whether the Fed will really end its massive bond-buying programme this month as it has earlier indicated, or if it will stay its hand given a recent slate of mixed US data that has thrown into question the strength of the world's biggest economy.

4. Also on Thursday, the US Commerce Department will release its first estimate of US economic growth in the third quarter of this year. Economists surveyed by Bloomberg News predict that gross domestic product (GDP) grew 3 per cent in the three months to September, down from 4.6 per cent in the previous quarter.

5. Crude oil prices have fallen 25 per cent since June.

A Reuters report has noted that while this should mean a windfall for Asian refiners, they are instead facing a major drag on profits. Although benchmark Brent and West Texas Intermediate crudes are just off multi-year lows, many refiners have previously agreed to pay higher prices for deliveries through to the end of this year and cannot pass those costs on to fuel buyers.