Investors should be able to take comfort that October, traditionally a difficult month for stocks markets is over. But no one is anticipating a year-end rally. Here are the five things to watch for this week.
1. US jobs data: This closely-watched monthly data report comes out late on Friday night. As a sign of the health of the US economy, investors will be watching to see if unemployment numbers drop, backing the US Federal Reserve Bank's comments last week that the broader US economy is showing more strength.
2. Quantitative easing in Europe? Most pundits say this is unlikely but others are tipping the European Central Bank to unleash a wave of easy money come Thursday as it tries to boost growth. More liquidity in the markets may spillover to Asian markets and give stocks a lift.
3. A weak yen and Aussie dollar: The Bank of Japan's surprise move to expand its stimulus plan sent the yen plunging. While the Nikkei has soared, the economy has yet to see much of a lift. However, the weaker yen should help exporters and also improve corporate earnings of the Japanese firms. Softer Chinese data is also weighing on the Aussie economy and the dollar.
4. Airlines stocks haven't done well this year as they have failed to capitalise on a surge in passenger numbers, partly because the many new carriers entering the industry have meant overcapacity and made the business unprofitable, a Bloomberg report says. Bloomberg also references investment guru Warren Buffett's comments a decade ago that he would not put money in airline stocks after his US$358 million "mistake" in US Airways. The Bloomberg report shows that 60 per cent of Asian airline IPOs have lost money since their debut. As well, the region's public traded carriers have racked up a combined US$1.8 billion in losses. Food for thought as Singapore Airlines reports its second-quarter results on Thursday and its budget carrier Scoot starts taking delivery of its first Dreamliner plane.
5. Singapore's third-quarter corporate earnings season gets into high gear. The local banks, DBS, UOB and OCBC have put in a relatively positive showing but Neptune Orient Lines continued to show that the freight industry is still plagued by low rates. Property players will be announcing results this week and next and these cannot make for uplifting reading.