Investors can expect April to be another volatile month as recession fears and geopolitical chaos swirl, according to market watchers.
The last week of March was dogged by revived concerns over the outlook for the global economy as the United States yield curve inverted, stoking recession fears.
While most market observers do not think a recession is on the horizon yet, they certainly see growth moderating.
"In the near term, we recommend investors to stay cautious as... we are likely to go through a soft data patch," DBS Bank economists Taimur Baig and Masyita Crystallin warned. They also foresee stress arising from some emerging markets, which could spill over to Asia.
Geopolitical turmoil, which has roiled markets since late last year, will also continue to pose an overhang to our markets this month, primarily from the ongoing US-China trade negotiations and Britain's Brexit conundrum.
OCBC Bank economist Howie Lee believes the US-China trade tension poses a "ready-made recession catalyst". "If it eventually emerges as a full-blown trade war, then the odds of a US recession would have largely increased... As long as negotiations remain ongoing, it remains a wild card and should not be singled out as a recession catalyst."
EYE ON TRADE TALKS
If it eventually emerges as a full-blown trade war, then the odds of a US recession would have largely increased... As long as negotiations remain ongoing, it remains a wild card and should not be singled out as a recession catalyst.
OCBC BANK ECONOMIST HOWIE LEE, on the US-China trade tension posing a "ready-made recession catalyst".
In the latest development, Chinese Vice-Premier Liu He will lead a delegation to Washington on Wednesday to continue trade talks.
White House economic adviser Larry Kudlow said the negotiations were not "time dependent" and could be extended, adding that they could take weeks or months to reach a final deal.
In Britain, Prime Minister Theresa May's Brexit plan was voted down for a third time last Friday. Ministers will hold another set of non-binding votes on various Brexit options in the Commons today. Meanwhile, the date for Brexit has been pushed back to April 12.
For Singapore, analysts said the country's real gross domestic product (GDP) growth, consumer price index and core inflation have fallen into the lower half of their official forecast ranges for this year. But equity-wise, they believe Singapore remains attractively valued relative to its growth prospects.
Pockets of opportunity lie in sectors such as real estate investment trusts (Reits). DBS regional equity strategist Joanne Goh said Singapore Reits should enjoy a prolonged rally as the yield gap widens further versus bond yields, and dividend yields offered by the sector are "very attractive" in a low-bond yield environment.
The Singapore Exchange S-Reit 20 Index of Singapore-listed Reits closed 0.2 per cent lower at 1,346.05 on Friday but has been on an uptrend year to date.
In the week ahead, data releases to watch include the official purchasing managers' index for March which is due today, and it should provide insight into the health of the Singapore economy. The preliminary Urban Redevelopment Authority private home price index for the first quarter is also due.
Singapore's central bank is also expected to confirm the release date of the monetary policy statement together with the advance first-quarter 2019 GDP estimate.
Against the current economic backdrop, the Monetary Authority of Singapore is likely to leave its exchange rate-based policy unchanged this month, pausing after two tightening moves last year.
Across the region, China's government debt will begin to be included in the Bloomberg Barclays Global Aggregate Bond Index today, a development that could help shore up investor sentiment. China and Hong Kong will go on a break on Friday for Tomb Sweeping Day, a Chinese custom.