Singapore export data and United States monetary policy will likely take centre stage this trading week as the dust settles over last week's so-called "Super Thursday" trio of major news events.
The Straits Times Index managed to eke out a 0.4 per cent gain for the week, thanks to bargain hunting in property counters and a stellar performance in bank stocks.
The trifecta of the European Central Bank's monetary policy decision, ex-Federal Bureau of Investigation director James Comey's testimony and the results of the British election, in which Prime Minister Theresa May's Conservative Party lost its parliamentary majority, failed to roil stock markets globally.
The reaction has been negligible as the results were not a complete shock. In fact, stock markets in the euro zone last Friday welcomed the UK results because the eventual outcome of Brexit negotiations could be better for the region's economy.
Local stocks are expected to extend gains early this week after the Dow Jones Industrial Average gained 0.42 per cent last Friday.
According to DBS Group Research, the local market has been in consolidation mode, with only a 2 per cent gain since April, but there is room for the index to rise further in the second half of the year. It cited a global recovery now under way, and a buoyant merger and acquisition scene here, coupled with inexpensive stock valuations versus those of the region.
"Technically overbought positions in the major markets such as Hong Kong, South Korea and India could see fund flows rotating to markets, such as Singapore," DBS regional equity strategist Joanna Goh said.
This week, investors will be watching on Friday for Singapore's May non-oil domestic exports - in particular, electronics exports - for clues on the strength of global demand.
Also on their radar is the US Federal Reserve's policy meeting. The Fed will release its statement at 2am, Singapore time, on Thursday.
The US central bank is overwhelmingly expected to raise interest rates by 25 basis points, in view of recent weakness in employment and inflation data.
There is also a good chance of it announcing formal plans to shrink its balance sheet by "phasing out the reinvestment of maturing securities in its portfolio", Capital Economics economist Paul Ashworth said.
Here in Singapore, property stocks are expected to be in favour after the Government relaxed some property cooling measures.
"Land-deprived Singapore developers have aggressively started land-banking bids, having closed three en bloc sales over the past month," Ms Goh said. She added that the Government may respond by "raising the number of available land sites in the second-half government public land tender programme and/or raising the number of confirmed sites in the pipeline".
"We also expect office blocks to change hands potentially in the second half. With property companies pricing in a recovery in 2018, we believe these transactions are likely to fetch higher prices," she said.
