Investors likely to focus on central banks' easing efforts

After a week where global equities had their worst run since 2008's global financial crisis, investors are likely to place their attention on the easing efforts by central banks amid the worsening spread of Covid-19.

"Major central bankers are set to roll out further supportive measures this week, as policymakers attempt to shore up their respective economies," FXTM market analyst Han Tan said.

This, he added, might include the United States Federal Reserve moving ahead of its midweek meeting to announce a cut in the key Fed funds rate of 25 basis points (bps) to its lowest levels since 2015.

ING's Asia economist Prakash Sakpal expects "easing to intensify" among the region's central banks.

With February's data on factory output, retail sales and fixed asset investment likely to disappoint, the People's Bank of China could cut the loan prime rate by another 10 bps on Friday, Mr Sakpal said.

Central banks in Indonesia, Taiwan and the Philippines are also expected to lean towards policy easing this week, he added.

The easing of borrowing rates come as Covid-19 and its economic repercussions have brought heightened volatility to equity markets which are now mostly trading in bear territory.

On Friday, Wall Street's key benchmarks rebounded after having their worst performance since the Black Monday crash of 1987 as the US declared a national emergency to combat the fast-spreading coronavirus and US$50 billion (S$70.8 billion) in federal aid to fight the disease.

The Dow Jones Industrial Average jumped 9.4 per cent, the S&P 500 added 9.3 per cent and the Nasdaq climbed 9.4 per cent.

Singapore's Straits Times Index (STI) fell by more than 6 per cent on Friday, but clawed back most of those losses to end 1.7 per cent lower at 2,634.00. For the week, the STI plunged 11 per cent, its worst weekly performance since October 2008.

While global markets bounced back on Friday, Oanda Asia-Pacific senior market analyst Jeffrey Halley called it "a false dawn". He said: "Spain effectively locking its population down, Australia and New Zealand forcing all arrivals to self-isolate, and the US expanding its travel ban to the United Kingdom and Ireland, reinforces that view."

In Singapore, the economic docket remains light, with February's non-oil domestic exports reading tomorrow.

Mr Tan noted: "The global economy's woes stemming from the coronavirus outbreak are set to be manifested in Singapore's external trade data, with markets expecting on-year declines in the February figures."

UOB senior economist Alvin Liew said: "We expect a sharper decline of 6.4 per cent year on year in February, from 3.3 per cent year on year in January."

Bloomberg median estimates from analysts polled are pointing to a 4.6 per cent year-on-year decline.

Companies that have yet to report earnings for the October-December quarter include Top Glove - one of the largest producers of latex gloves globally. It will post second-quarter results on Thursday.