Global equity markets made a surprise post-Christmas comeback last week. Have they bottomed out amidst so much volatility? As we usher in the new year, the search for clarity continues. Let's start with the key economic updates from China and the US.
With New Year's Day falling on Tuesday, a slow start to the week is expected. That said, this week packs some important releases from the US, including December's ISM manufacturing reading and payrolls update - these are likely to affect the market, notes IG market analyst Pan Jingyi.
"December's payrolls and unemployment are expected to once again fall in line with the recent positive showings, while the wage inflation is expected to improve, doing nothing more than affirming the Fed's view on strong economic conditions," Ms Pan said. She added that "2018 may be remembered as the year with some of the best earnings, but also the worst market plunges amid the ever-so-often political and geopolitical influences. Going into 2019, there are little doubts that we would continue to find updates from many of these issues lingering."
Indeed, by the closing bell on Friday, US stocks finished a choppy session mostly lower, concluding a raucous week which saw Wall Street's worst-ever Christmas Eve drop, followed by a historic rebound. The Dow slipped 0.3 per cent to 23,062.40 on Friday. The S&P 500 fell 0.1 per cent to 2,485.74, and the tech-rich Nasdaq edged up 0.1 per cent to 6,584.52. Energy stocks were the biggest losers in the S&P 500, while tech stocks including Facebook and Microsoft dipped almost one per cent. With one trading session left for the year, all three indexes are well into the red.
Stephen Innes, head of Apac trading at Oanda, noted Singapore was not the only market hobbling into the year-end with traders remaining "wholly perplexed" by the wild price swings in US stocks.
"Markets are in desperate need of liquidity which should start to return to markets in earnest next week as institutional traders return from an extended holiday on Jan 2," he explained.
Nonetheless, Mr Innes expected volatility to remain as Singapore investors would be squarely focused on China's manufacturing PMI data due for release on Monday morning. Given that China's economic slowdown is one of the significant risks facing global markets out of the gate in 2019, he said this critical data release could set the tone of the market for January.
Closer to home, FXTM analyst Lukman Otunuga thought Singapore investors would direct attention towards the usual bank lending data for November, scheduled for release this morning.
There will be a special focus on the fourth quarter GDP report on Wednesday which should provide fresh insight into the health of the Singapore economy. With the manufacturing PMI for December released later in the week, it will certainly be an eventful trading week for the Singapore dollar," he said.
Mr Otunuga said while postive domestic economic data could raise the local currency, he felt the outlook would still be shaped by external factors such as global trade developments and the US dollar's performance.
On the commodities front, Phillip Futures' commodities analyst Benjamim Lu is bullish on gold for the week ahead. On oil, he expected the Brent Crude to range between US$53 and US$58 per barrel.
"Choppy trading conditions will continue to encapsulate pricing action for crude oil, as traders weigh between persistent economic headwinds and Opec production cuts in Q1 2019," Mr Lu said.