Markets Insight

Eye on Wall Street rally, bank earnings this week

Wall Street's new record highs on Friday, fuelled by anticipation over United States President Donald Trump's expected tax announcement in a few weeks, will likely continue to lift investor sentiment and markets in the region, including Singapore's, this week.

The Straits Times Index (STI) gained a whopping 1.9 per cent last week on Wall Street's rally, which came on the back of healthy corporate earnings and the prospect of tax cuts, reduced regulations in the financial sector and increased infrastructure spending.

The Dow Jones Industrial Average jumped 0.48 per cent on Friday to 20,269.37, while the S&P 500 gained 0.36 per cent.

Also seen buoying sentiment is Mr Trump's affirmation at his weekend meeting with Japanese Prime Minister Shinzo Abe that Japan is an "important and steadfast ally", and that the US was committed to even closer bilateral ties. These comments, along with Mr Trump's agreement to honour the "One China" policy, are seen by analysts as signs that Mr Trump is moving closer towards the status quo in the US' ties with the two Asian powers.

Trade between the world's largest economy and the rest of the world has been a key concern for global markets, in the light of Mr Trump's protectionist stance.

Investors will also be watching this week's meeting between Mr Trump and Canadian Prime Minister Justin Trudeau for developments in the North American Free Trade Agreement.

Here at home, traders will be eyeing Singapore's non-oil domestic exports (NODX) for last month, to be released on Friday, and the market is expecting some moderation after two months of exceptional growth.

Still, that easing is unlikely to be drastic. "With the latest better- than-expected Chinese trade data last week, one would not be surprised to see Singapore's NODX figure falter less than expected," IG market strategist Pan Jingyi said.

Also on the radar are Singapore's three local banks, which report their full-year earnings this week. Taking the lion's share on the local bourse, the banks' results are likely to significantly influence the STI's direction.

OCBC Bank is expected to kick off the week with its full-year results tomorrow, DBS Group will announce its earnings on Thursday and United Overseas Bank on Friday.

Property giant CapitaLand's fourth-quarter and full-year earnings will be released on Wednesday, while ST Engineering will announce its full-year results on Thursday.

Investors' attention will also be on US Federal Reserve chairman Janet Yellen, who will deliver the semi-annual monetary policy report tomorrow and on Wednesday.

Analysts say the Fed is likely to keep the rhetoric unchanged and try to stay on-message for three rate hikes this year amid an uncertain environment.

A version of this article appeared in the print edition of The Straits Times on February 13, 2017, with the headline 'Eye on Wall Street rally, bank earnings this week'. Print Edition | Subscribe