Markets Insights

Oil prices and US presidential debate in focus

Much of the attention this week will likely turn to oil prices and the presidential debate in the United States.

The Opec (Organisation of Petroleum Exporting Countries) is meeting today for the third time this year in Algeria to discuss the supply glut in the crude market. Oil prices tumbled last Friday in a sign that market watchers do not expect a deal on production limits to be reached at the meeting.

The first of three US presidential debates will also take place today, ahead of the November election. "Closer to the election date, we expect volatility to rise as markets start pricing in the risk of a Trump presidency, which would inevitably herald greater uncertainty ahead on the back of a radical policy agenda," said Mr Vasu Menon, OCBC Bank's vice-president and senior investment strategist, in a recent report.

A Clinton presidency would offer more stability and an incremental approach to policy, he added.

Traders here will be watching for Singapore's August industrial production numbers, due out today. Japan is also slated to release a slew of economic data on Friday which could offer more insight into the country's stagnating economy.

The past week was dominated by two key policy meetings in Japan and the US: the Bank Of Japan launched a new form of monetary policy easing, while the US Federal Reserve decided to stand pat on interest rates, in line with market expectations.

Wall Street halted its longest winning streak in seven weeks as the Dow Jones Industrial Average slipped 0.71 per cent on Friday.

At home, the Straits Times Index (STI) rose 10.89 points or 0.38 per cent to close at 2,856.95 on Friday - up 29.5 points or 1.04 per cent for the week. Turnover fell 5.11 per cent to 49.4 million units, an improvement from the 11.03 per cent drop in the week before.

"Investor confidence here hasn't recovered yet, especially with the recent Swiber saga, which has deepened concerns on the outlook of the oil and gas sector," market analyst Margaret Yang at CMC Markets Singapore told The Straits Times.

She noted that the Singapore market has lagged behind Asian peers over the last three months. While the benchmark index in Hong Kong rose 15 per cent during the period, Tokyo's by 12 per cent and Jakarta's by 13.6 per cent, the STI was up only 2.2 per cent.

"We will need to see a strong breakthrough above the 2,900 level in the STI before we can expect any meaningful rally. But I won't rule out a 'catch-up' rally should third-quarter corporate earnings bring us positive surprises."

Container ship operator Rickmers Maritime Trust, which announced a revised restructuring plan for its $100 million 8.45 per cent notes due next year, slumped 23.2 per cent during the week to 4.3 cents on Friday.

Marco Polo Marine, which said on the same day that it is seeking approval to delay repayment for its $50 million notes due for maturity next month, sank 13.3 per cent to 6.5 cents.

Thai Beverage rose 3.2 per cent in the week to 96 cents. Reports said the group is joining major foreign brewers to buy a stake in Vietnam's largest brewer Sabeco in a deal that could be worth at least US$1.8 billion (S$2.4 billion).

A version of this article appeared in the print edition of The Straits Times on September 26, 2016, with the headline 'Oil prices and US presidential debate in focus '. Print Edition | Subscribe