5 things to know before the Singapore market trades this week: Aug 3-9

The Singapore stock market will be closed for four consecutive days over the Jubilee weekend.
The Singapore stock market will be closed for four consecutive days over the Jubilee weekend. PHOTO: BLOOMBERG NEWS

1. US jobs report is key to Fed rate hike

The US Labor Department releases its monthly jobs report on Friday - considered to be a key piece of economic data as the Federal Reserve considers whether to raise near-zero interest rates in September. Economists surveyed by The Wall Street Journal expect the report to show the US economy added another 215,000 jobs in July.

The odds of a September rate hike fell last Friday after the release that day of data that showed a very sharp and unexpected decline in US wages and salaries. Analysts said this might trigger alarm bells at the Fed, causing a delay for the first rate hike since 2006. US wages and salaries rose 0.2 per cent in the second quarter, decelerating from 0.7 per cent growth in the first and the smallest growth in civilian employment costs on record.

Another signal for the Fed, which has been concerned about the slow pace of inflation, will come on Monday, when the Commerce Department releases personal and spending data.

Why do we care about a US rate hike? Once the Fed begins raising rates, the expected path of future rates and what that does to the US dollar will impact the rest of the global economy.

2. Latest round of PMI surveys

The latest round of private purchasing managers surveys - purchasing managers' index or PMIs - from China to Europe to the US and Singapore - also will be released this week. The manufacturing PMI surveys are out on Monday, with the PMIs for the services sector due on Wednesday.

As the global manufacturing slowdown continues, Singapore's PMI data will indicate how badly and how long the Republic will be affected.

China's official PMI survey, released last Saturday, showed that growth at the big manufacturing firms it covers unexpectedly stalled in July as both export and domestic orders shrank. This reinforced views that the world's second-largest economy needs more stimulus as it faces fresh risks from a plunging and volatile stock market.

All eyes will now be on the private Caixin PMI survey out on Monday for how smaller factories fared.

3. All eyes on Greek banks as its stock exchange reopens

Greek traders told Reuters they expect the Athens benchmark stock index to tumble 20 per cent or more when the market opens on Monday after being shuttered for five weeks as part of attempts to stop Greece's financial collapse. And banking stocks are expected to be the worst hit. Greek banks are in a vulnerable position because some 40 billion euros has been withdrawn from them since December, according to the country's banks association. A report in Sunday's Avgi newspaper, which is close to Prime Minister Alexis Tsipras' government, suggested Athens is seeking around 10 billion euros this month to recapitalise the banks.

The reopening of the stock market comes after senior EU and IMF auditors held their first meetings with Greek ministers to finalise the new three-year bailout which could be worth up to 86 billion euros. The banks reopened after three weeks on July 20, but withdrawals and money transfers abroad remain under tight controls. Greeks can withdraw only up to 420 euros a week.

4. Long SG50 holiday week for Singapore but watch out for these earnings

The Singapore stock market will be closed for four consecutive days over the weekend, thanks to the SG50 holiday on Friday as well as the National Day public holiday on the following Monday.

But some earnings announcements to look out for before the long weekend will be SembCorp Industries and Biosensors on Tuesday and Wilmar International and StarHub on Wednesday.

5. BoE meets but don't expect a rate hike

The Bank of England's Monetary Policy Committee meets on Thursday to set interest rates. Although few expect any rate rise until early next year, several are expecting a few of its nine members to break ranks and vote for a hike. The BoE is also due to release forecasts on growth, inflation and employment.