This market is not for the faint-hearted.
The CBOE Volatility Index (VIX) - the market's best fear gauge - shot above 40 again last Friday after jumping as high as 50 earlier last week. It was below 14 at the end of last month.
After a turbulent week of wild swings, the Dow Jones Industrial Average closed at 24,190.90, up 330.44 points, or 1.38 per cent, last Friday. In the past two weeks, more than US$5.2 trillion (S$6.9 trillion) have been wiped off global markets as measured by the S&P Global BMI index, according to data from S&P Dow Jones Indices' Mr Howard Silverblatt. This exceeds the gross domestic product (GDP) of Britain and Canada combined.
"What's happened here is an understanding that inflation is returning and that the central bank quantitative easing that we've grown accustomed to is coming to an end," Mr Jim Bianco, head of advisory firm Bianco Research, told CNBC. "Since the financial crisis, this is the first 10 per cent correction in stocks that has not been accompanied by a significant fall in rates."
The pace of the increase in US Treasury yields will be closely monitored, as that may continue to spook financial markets and result in a tightening of financial conditions.
Hence, the US Consumer Price Index (CPI) January data - to be released on Wednesday - will be a key indicator to watch, to see if inflation has picked up. The consensus view is for a 2 per cent year-on-year hike. A confirmation of sequential pick-up could reinforce the bond sell-off and spill over to an equity sell-off again.
Other key US data to be released include advance retail sales (Wednesday), the producer price index (Thursday) and industrial production (Thursday).
"It will still be a moderately busy week for US earnings reports and the focus could be on the consumer-discretionary and leisure-related companies," said United Overseas Bank economist Alvin Liew.
This week will be a holiday-shortened one for most of the Asia-Pacific, except Thailand, New Zealand and Australia. Investors can expect market liquidity to shrink in the lead-up to the Chinese New Year holidays, which will start from Thursday and last until Feb 21 in China.
Key data from Asia includes fourth-quarter 2017 GDP data from Taiwan (out tomorrow), Japan and Malaysia (both out on Wednesday); India's December industrial production and January CPI data (both out today); January trade data from India (Thursday); and Australia's January labour market report (Thursday). There are also monetary policy decisions from the Bank of Thailand (Wednesday) and Bank Indonesia (Thursday). Both are expected to leave policies unchanged this month.
Singapore is unveiling its December retail sales data this morning, but economists will be looking out particularly for Q4 2017 GDP and January non-oil domestic exports.
"We will be closely watching Singapore non-oil domestic exports for a clearer idea about the Monetary Authority of Singapore's policy. The export story here is less impressive and the fate of the MAS policy at the semi-annual meeting in April hangs in the balance," said ING's economist for Asia Prakash Sakpal.
Economists expect the local market to be underpinned by a pro-business Singapore Budget, to be unveiled on Feb 19.
Venture Manufacturing, Sembcorp Marine, Mapletree Commercial Trust, Keppel Reit and Mapletree Logistics may see some speculative interest as one of them could replace Global Logistic Properties in the MSCI Singapore main index. The latter, a warehouse operator, was delisted last month after it was acquired by a Chinese consortium.
The Singapore Exchange could be rattled by news that India's three main exchanges will stop licensing data for offshore derivatives linked to their domestic indices, in a bid to prevent trading volumes from leaking overseas.
