5 things to know before the Singapore market opens this week: Nov 16-22

A man walking past a share prices board in Tokyo on Nov 2, 2015. PHOTO: AFP

1. Paris attacks and market impact

Attacks by Islamist militants across Paris last Friday (Nov 13) could see increased buying of US government bonds or Treasuries when markets open on Monday (Nov 16) as investors move assets from higher risk stocks into a safe haven.

Before the assault unfolded, Wall Street had its worst week since August, with major US indexes all shedding more than 1 per cent after a spate of mixed economic data. Taken as a whole, the data raised some concerns about the strength of the US economy but was not worrying enough to significantly reduce bets that the Federal Reserve would raise interest rates at its next meeting in December.

"The knee-jerk reaction in other terrorist attacks over the last decade has been a rush to safety, including aggressive buying in the US Treasury markets," said Mr Guy LeBas, chief fixed income strategist at Janney Montgomery Scott LLC in Philadelphia. "I sincerely hope these attacks will prove short in duration and will abate in intensity, in which case the market reaction will likely only include a brief safety bid in Treasuries."

2. Inflation data, minutes may seal deal for December Fed rate hike

Inflation numbers from the US on Tuesday could be the final ingredient required to convince the Federal Reserve to raise interest rates in December.

Earlier in November, a robust report on US employment hardened expectations for the Fed's first rate increase in nearly a decade and if prices are shown to be rising steadily those views will likely solidify.

Reuters polls see inflation at 1.9 per cent year-on-year, unchanged from the previous reading.

Minutes from the Fed's October meeting will also be published, giving an insight into the Committee's decision to remove a key sentence on global risks from its policy statement.

"We have had a strong October jobs report and Fed chair Janet Yellen herself referring to a December rate rise as a 'live possibility' for the first time," said economist Chris Hare of Investec. "The coming week should shed a little more light on the prospects for tightening this year."

3. Japan likely in recession

GDP data on Monday will probably show Japan fell into a technical recession in the third quarter, maintaining pressure on the Bank of Japan and Prime Minister Shinzo Abe to support the world's third-largest economy.

No change in policy is expected from the BOJ when it meets on Friday but it could ease monetary policy further early next year, according to nearly half the analysts surveyed by Reuters, as consumer prices fall short of central bank forecasts.

4. China housing data in focus

In China, where Beijing has rolled out a flurry of support measures since last year to avert a sharp slowdown, key data on Wednesday will show how the country's housing market is performing and whether it is supporting the struggling economy.

"Recently, we have seen an increasing number of cities reporting a sequential home price increase, a trend which we think continued despite a slowdown in home sales growth in October," said Mr Rob Carnell at ING. "Overall, we believe that China's growth prospects depend on housing."

The world's second-largest economy grew a reported 6.9 per cent in the third quarter from a year earlier, the weakest pace since the global financial crisis, but a pace many say likely overestimated the real pace of growth.

5. Singapore exports seen shrinking again

Singapore's exports in October are forecast to have contracted as a sluggish global economy crimped demand for goods, a Reuters poll showed.

Non-oil domestic exports (NODX) in October were seen falling 3.0 per cent from a year earlier, according to the median forecast of 11 economists in the survey. Overseas sales grew 0.3 per cent in September on a pick-up in exports of electronics products, but shipments to major markets such as China and the United States fell.

Source: Reuters

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