5 things to know before the Singapore market opens this week: Oct 26-Nov 1

The US Federal Reserve Building in Washington, DC.
The US Federal Reserve Building in Washington, DC.PHOTO: AFP

1. Fed meets - but all bets on still no rate move

The Federal Reserve's policy-setting committee meets again this week - but there is only a 6 per cent chance the US central bank will lift its benchmark interest rate from historic lows this time, according to Fed funds futures.

Still, the Fed's announcement and accompanying statement - due at 2am on Thursday (Oct 29), Singapore time - will be waited on with bated breath for clues as to when the Fed will likely make its first rate hike in nearly a decade.

Analysts say the European Central Bank's signal last week that more stimulus is coming for Europe's economy could complicate the Fed's own message this week on when it might move in the opposite direction.

ECB president Mario Draghi caused the US dollar to jump against the euro on Thursday when he said the ECB was studying new ways to fight off deflation and spur growth that may be announced as soon as December.

The Fed's next rate-setting meeting is also in December and although Fed chief Janet Yellen has signalled that a rate rise is likely this year, she also specifically cited US dollar strength as one reason the Fed held fire at its September meeting, along with a sharper slowdown in China.

Many big US companies also report earning this week, notably Apple, Pfizer, Alibaba and Exxon Mobil.

2. China's big meeting to plan for next 5 years

Chinese leaders start a key meeting in Beijing on Monday to formulate a new Five-Year Plan to battle slowing growth.

Setting the rather gloomy tone for this meeting, China last Friday cut interest rates for the sixth time in less than a year and Chinese Premier Li Keqiang on Saturday said that the economy does not need to grow 7 per cent this year.

Figures last week showed the world's second-largest economy grew at 6.9 per cent in the third quarter, its slowest rate in six years - although independent analysts believe the true figure could be significantly lower.

For China, the problem is how to restructure the economy towards long-term sustainable growth while limiting the cost to current growth.

It is a dilemma China's leaders will grapple with at this week's plenum, whose highlight - the announcement of Beijing's official growth target - and any other news will come only at the end of the four-day meet on Thursday.

3. US GDP and other data also in focus

This week sees the release of a slew of key US data, the biggest being advance third-quarter economic growth figures on Thursday at 8pm, Singapore time.

Then there's new home sales (Monday), durable goods orders (Tuesday), pending home sales (Thursday) and personal income and spending (Friday).

Economists polled by Reuters are expecting US economic growth to have slowed to an annualised 1.7 per cent in Q3, down from 3.9 per cent in the second quarter as a weaker global economy took its toll.

But assuming the US Congress strikes another last-minute deal before a Nov 3 deadline to avoid defaulting on its debt, growth is expected to pick up towards the end of the year and remain strong in 2016.

4. Japan mulling more stimulus

The Bank of Japan is also considering an expansion of its stimulus efforts, after the economy shrank in the second quarter and might have slipped back into recession, Reuters reported.

Six of 13 economists in a Reuters poll said the BOJ will add to its stimulus when it meets this Friday, with inflation forecast to be just 0.1 per cent in the fiscal year to March 2016. But several BOJ policymakers are reportedly wary of moving at Friday's meeting, clinging to the hope that Japan's economy will weather the slowdown from abroad.

5. Singapore's big banks report results

Two of the Big Three local banks report their quarterly performance this week - OCBC (Wednesday) and UOB (Friday). Other heavyweights announcing results this week include Sembcorp Industries (Thursday) and Global Logistic Properties (Friday).

On the local economic data front, Singapore's September industrial production data will be out on Monday, while third-quarter unemployment data will be released on Thursday.

Sources: Reuters, Financial Times