Markets Insight

US elections, corporate earnings in focus

The upcoming presidential elections in the United States will continue to set the tone for the market in the coming week, along with corporate earnings here as more firms turn in quarterly results.

The past week was a lacklustre one as traders mostly sat on the sidelines amid a higher level of uncertainty. Markets worldwide have been pricing in a victory for Mrs Hillary Clinton as the US inches closer to electing its next president on Nov 8, although some analysts have noted that this could give rise to massive volatility should Mr Donald Trump, against the odds, win.

The benchmark Straits Times Index slid 12.68 points, or 0.45 per cent, to 2,816.26 on Friday - down 0.52 per cent for the week.

A US Federal Reserve meeting, slated to take place early Thursday (Singapore time), will also be closely watched. Market consensus is that the Fed is unlikely to push for a rate hike ahead of the elections.

"There are so many risk events coming up, people just sort of want to get those out of the way before they commit," Mr James Woods, a strategist at Rivkin Securities in Sydney, told Bloomberg. "There's quite a bit of cash sitting on the sidelines, waiting to be deployed."

Japan is set to unveil figures on industrial production, retail sales and housing starts today, followed by a monetary policy update tomorrow. A Moody's Analytics report noted the Bank of Japan will likely leave policy settings unchanged after having announced a shift in the monetary framework at its last meeting.

"Domestic conditions in Japan remain downbeat, with industrial production and retail sales expected to contract in September," it said. "The external sector is benefiting from stronger global demand for electronics, but the strength of the yen is hampering growth."

At home, corporate earnings will continue to be in focus as well. Among the most keenly watched is DBS Group Holdings, due to release its third-quarter results today.

The local banks have been in the spotlight this reporting season, particularly their exposure to the still-struggling oil and gas market. OCBC last week posted a 5 per cent year-on-year growth in third-quarter net profit to $943 million, but said it set aside $99 million in allowance for declining asset quality, of which $33 million was for the oil and gas sector. The stock climbed 0.1 per cent for the week to $8.50.

United Overseas Bank, which saw third-quarter net profit drop 7.8 per cent to $791 million, similarly raised charges for bad debts linked to the oil and gas sector. It lost 1 per cent last week to $18.63.

Sembcorp Industries, which reported third-quarter net profit fell 55.9 per cent to $53.9 million, retreated 1.9 per cent to $2.53. Its marine arm Sembcorp Marine slumped 4.1 per cent to $1.28.

A version of this article appeared in the print edition of The Straits Times on October 31, 2016, with the headline 'US elections, corporate earnings in focus'. Print Edition | Subscribe