Markets Insight

Market to take cue from US, local data

Wall Street's strong close last week was due partly to the relative strength of Brent oil prices, which posted their biggest weekly gain since late July.
Wall Street's strong close last week was due partly to the relative strength of Brent oil prices, which posted their biggest weekly gain since late July.PHOTO: AGENCE FRANCE-PRESSE

S'pore shares could get lift from Dow and S&P 500, which set new highs at last Friday's closing

Local shares might open on a more confident note today, after Wall Street's defiantly optimistic close at the end of last week.

While news of another missile test by North Korea dragged down many bourses across Asia - including Singapore - on Friday, the Dow Jones Industrial Average and the Standard & Poor's 500 Index both set new highs.

This was partly thanks to the relative strength of Brent oil prices, which held near five-month highs and posted their biggest weekly gain since late July, as investors looked forward to the gradual restart of United States oil refineries in the aftermath of Hurricane Harvey.

This week, the US Federal Reserve will likely take centre stage, said IG market strategist Pan Jingyi in a note.

The Federal Open Market Committee will start its two-day meeting tomorrow, during which it is set to discuss plans for further interest-rate hikes.

"The likelihood of seeing an interest-rate change in this meeting will be next to none," Ms Pan noted.

"The broad view surrounding the Fed's rate-hike path is for changes to be withheld until next year , although recent indicators, such as the latest August consumer price inflation, have strengthened the case for a lift-off in December."

US consumer prices accelerated last month, rising by 0.4 per cent - its fastest growth in seven months. The Fed has blamed persistent low inflation for its reluctance to raise interest rates further from the current, near-zero level.

The release of other US economic data this week will also provide cues for the market, including data on industrial production, and business inventories.

Traders are likely to be paying attention to some local data too. Figures on August non-oil domestic exports (Nodx) will be released today, with economists expecting a fourth straight month of expansion.

Nodx likely rose 11.8 per cent in August from a year earlier, accelerating from the pace in July, according to the median forecast of 10 economists by Reuters.

In July, Nodx grew 8.5 per cent from the same month a year earlier.

ANZ economist Ng Weiwen told Reuters that Singapore's factory activity in August, which expanded at the fastest pace in nearly three years, pointed to continued growth in electronics exports.

"It suggests that the tech cycle still has legs," he said.

A version of this article appeared in the print edition of The Straits Times on September 18, 2017, with the headline 'Market to take cue from US, local data'. Print Edition | Subscribe