MARKETS INSIGHT

Sentiment likely to remain cautious following rocky week

Sentiment across markets in the coming week will likely be more muted, following a slew of economic data and central bank meetings that kept traders on their toes last week, according to analysts.

One of the few key events investors will be looking out for is the United States' non-farm payrolls report, to be released on Friday, which is expected to further indicate strength in the labour market. In Asia, attention will be on China, which released manufacturing data over the weekend. Singapore is due to report its manufacturing figures tomorrow.

China's official factory gauge yesterday showed an improvement in the country's manufacturing activity for April - though the rebound was only marginal.

Mr Zhou Hao, senior emerging market economist at Commerzbank in Singapore, said in a note that the results were "a little bit disappointing", according to a Reuters report. "To some extent, this hints that recent China enthusiasm has been a bit overpriced and the data improvement in March is short-lived," he added.

The past week had been rocky for most Asian equities, especially after the Bank of Japan quashed hopes for further stimulus as it left its monetary policy unchanged in a surprise move. The Japanese yen, as a result, strengthened sharply against major currencies.

DIMINISHING IMPACT

Central banks look like they have run out of bullets to a degree... We're getting to that point where there are limits to the results they can get from anything more they do. This points to a fragile outlook with still a lot of risks out there.

MR MARK LISTER, head of private wealth research at Craigs Investment Partners.

"Central banks look like they have run out of bullets to a degree," Mr Mark Lister, head of private wealth research at Craigs Investment Partners in Wellington, which manages about US$7.2 billion (S$9.7 billion), told Bloomberg. "We're getting to that point where there are limits to the results they can get from anything more they do. This points to a fragile outlook with still a lot of risks out there."

At home, the benchmark Straits Times Index (STI) closed at 2,838.52 on Friday - down 101.91 points or a hefty 3.47 per cent for the week. It finished all five sessions in the red, tracking mostly the United States, which clocked a poor performance, as well as corporate earnings.

Wall Street slipped 0.3 per cent on Friday to post its biggest weekly decline in more than two months, dragged down by earnings results that continued to disappoint and news of lacklustre economic growth.

IG market strategist Bernard Aw told The Straits Times he believes bargain hunters here could be on the prowl this week, given that the market had fallen by a fair bit in the past week. But he added: "If there is any rebound, it will be modest. There are few factors that can really drive up sentiment, and traders will likely remain cautious."

On the corporate earnings front, DBS Group Holdings is set to announce its quarterly results tomorrow, followed by Sembcorp Industries on Wednesday.

The Singapore market is closed for the Labour Day holiday today and will reopen on Tuesday, along with mainland China, Hong Kong, Taiwan, Malaysia, Thailand and Vietnam. Japan is closed for the Golden Week holiday and will resume trading on Friday.

A version of this article appeared in the print edition of The Straits Times on May 02, 2016, with the headline 'Sentiment likely to remain cautious following rocky week'. Print Edition | Subscribe