5 things to know before the Singapore market opens this week: Feb 15-21

Pedestrians walk past Chinese national flags displayed along the Nanjing Road pedestrian street in Shanghai.
Pedestrians walk past Chinese national flags displayed along the Nanjing Road pedestrian street in Shanghai. PHOTO: BLOOMBERG

1. China markets reopen

All eyes will be on China when it reopens for business after a week-long holiday for Lunar New Year gave stock markets there a break from the turbulence witnessed around the world. How turbulent? The US share benchmark Dow Jones average jumped 2 per cent on Friday but still ended the week down 1.5 per cent.

What could hit China stocks is trade data due for release on Monday which is expected to show exports slumped at a faster rate in January.

Look also at the yuan. In January, the falling yuan exchange rate and plunging share markets in China fuelled global turmoil and helped send world stocks to their lowest level in more than two years. But Beijing has tried to slow down the yuan's decline by setting higher trading guidance and reportedly buying US dollars in the last couple of weeks before the holidays.

Now China's central bank faces a difficult choice, as Bloomberg points out. Raising the yuan fixing on Monday to match last week's drop in the US dollar would undo much of the benefits of January's depreciation. But any overt weakening bias after the week-long holiday risks worsening global market turmoil.

2. Oil bottoms?

US and European stocks rallied on Friday, ending a five-day losing streak, partly because of a jump in oil prices on prospects for a coordinated Opec production cut sparked by comments from the energy minister of United Arab Emirates. US crude soared 12.3 per cent to US$29.44 a barrel after hitting US$26.05 a barrel on Thursday, a more than 12-year low. Brent crude settled up 11 per cent at US$33.36 a barrel.

The big question this week? Was it all just talk?

Oil prices have slumped by more than 70 per cent over the past 18 months as the Organisation of the Petroleum Exporting Countries, led by top producer Saudi Arabia, sought to drive US and other producers out of the market by refusing to cut output despite a supply glut. The price crash has crippled energy companies and some economies that depend heavily on oil revenue for income and added to global deflationary fears.

3. Fed talks

Market turmoil, China's economic slowdown and global recessionary fears were risks to US growth highlighted by Fed chief Janet Yellen in Congressional testimony last week. This week a slew of scheduled speeches by other top Fed officials could give more clues of how far the next US interest rate hike is.

Wednesday sees the release of the minutes from the Federal Reserve's January policy meeting with a breakdown of the discussions which resulted in unchanged interest rates.

4. Draghi testifies

On Monday night Singapore time, European Central Bank president Mario Draghi will deliver his quarterly testimony to the Economic and Monetary Affairs Committee.

While market turbulence last week seem to show that investors are increasingly questioning the central banks' abilities to boost inflation and growth, still Mr Draghi's speech will be closely watched for hints of further monetary easing in March. Last month, Mr Draghi hinted that nothing is off the table.

Other central banks are not waiting for the ECB to act. Japan moved to negative interest rates last month and Sweden followed last week.

5. Singapore exports and bank results dominate

Key non-oil domestic export data for January will be out on Wednesday, after Monday's release of retail sales for January.

Also hotly awaited are fourth-quarter results from two of Singapore's Big Three banks - UOB on Tuesday and OCBC on Wednesday. DBS reports next Monday.