5 things to know before the Singapore market opens this week: Sept 28-Oct 4

Workers in a manufacturing plant in Woodlands.
Workers in a manufacturing plant in Woodlands. ST PHOTO: KUA CHEE SIONG

1. US jobs in focus

The data highlight this week is Friday's (Oct 2) US non-farm payrolls - a strong report will raise the prospect of US rate hikes. 

The data is expected to show the US economy added 203,000 jobs in September, up from 173,000 in August, with the unemployment rate holding steady after falling in August to 5.1 per cent, its lowest since April 2008. Wage growth, a focus for Federal Reserve policymakers, is also expected to have accelerated last month.

For markets, it is important the jobs number does not miss expectations or that would confirm fears about the US economy. The recent sharp sell-off in global financial markets was sparked by the Fed holding back on raising rates for the first time in nearly a decade because of worries about China's economy impacting the US.

The Fed has two more chances to hike rates this year, at meetings in October and December. A Reuters poll this week found 72 of 93 economists expected a rise in December. Only nine foresaw a move next month and eight predicted the decision would be deferred to the first quarter of 2016.

2. Still on Fed watch

A flurry of Fed policymakers are due to speak this week, which could help hone views on the likely timing of a rate hike.

The highlight: Fed chief Janet Yellen makes opening remarks at a St Louis Fed conference on Thursday (Oct 1) morning, Singapore time. She reiterated last Thursday that the Fed could hike rates this year and said that she was personally in agreement with that. Those and other remarks helped clarify her comments from the week earlier, when the Fed held off on a rate hike and spooked the markets by highlighting its concerns about a slowing China.

Other key Fed officials to watch out for: New York Fed president William Dudley speaks on Wednesday and Fed vice-chairman Stanley Fischer on Saturday.

3. China PMI will weigh on markets

Purchasing Managers' surveys on Thursday will give further clues to the strength of China's economy, after a similar release last week showed factory activity at a 6-1/2 year low.

China's central bank may also release foreign exchange reserves data this week which will reveal how severe capital outflows have been. The US$93.9 billion (S$133.8 billion) decline in China's reserves in August, after moves to support the yuan following its Aug 11 devaluation, was the biggest monthly fall on record and marked an 11 per cent drop from a June 2014 peak. Though at US$3.557 trillion as of August, China's forex reserves remain the world's biggest.

4. US budget battle in Washington?

Washington faces a deadline this Thursday (Oct 1) to pass legislation that will keep the US government open. Some congressional Republicans are threatening to shut down the federal government unless a forthcoming spending bill strips funding for Planned Parenthood - although they seem unlikely to gain enough votes to carry out their threat.

Then there is the jockeying over who will replace US House Speaker John Boehner, who last week announced hi shock exit.

The possibility of more brinksmanship in Washington and a potential government shutdown will keep US markets on edge this week.

5. Key Singapore data this week

This will come on Thursday with the PMI manufacturing index at 9pm. Before that at 8.30am, the URA will release its advance private property indices for the third quarter.

Sources: CNBC, Reuters