Traders will have plenty to work on this week as the twin troubles of property cooling measures and trade tariffs continue to maintain pressure on equity markets.
The benchmark Straits Times Index was a gloomy sight last Friday, ending the day nearly 65 points, or 2 per cent, down at 3,191.82 after beginning the week at 3,238.94, equating to a 1.5 per cent fall over the course of the week.
The local property market will still be the "buzz in town", United Overseas Bank (UOB) analysts Alvin Liew and Ho Woei Chen wrote.
Property stocks capped one of their worst weeks last Friday as news the night before of cooling measures and tightening of mortgage loans sent their counters into a tailspin.
The measures - the ninth round of property cooling initiatives since 2009 - will decelerate home sales this year as the higher additional buyer's stamp duty could curtail investment demand from locals and foreigners, and the larger cash outlay required for down payment on homes weighs on buying interest, said Colliers International in a research note.
Colliers expects that new private home sales, excluding executive condominiums, could come in at 8,500 to 9,000 units this year, 15 to 20 per cent lower than the 10,566 units shifted last year.
"The measures will raise the cost of land acquisition for developers, and this will surely have a bearing on prices of collective sale sites going forward," said Colliers managing director Tang Wei Leng.
"It will likely tame the euphoria among would-be en bloc sellers and help to rein in any unrealistic price expectations." She added that sellers may now have to accept a lower premium if they want to get the deal across the line.
OCBC Investment Research head Carmen Lee said in a report that for longer-term investors, short-term price weakness in financials could present a "good opportunity" to gradually buy into banking stocks.
The week ahead will be anything but dull.
Key local data to look out for include the second-quarter gross domestic product results to be released on Friday, where growth is estimated to be between 4.1 and 4.4 per cent year-on-year, compared with 4.4 per cent in the first quarter, said UOB's Mr Liew and Ms Ho.
In addition, data on June foreign reserves will be out today, while Thursday will see the release of May retail sales data.
News on the trade war and potential retaliation measures will probably continue to guide market sentiment for now, wrote FXTM's global head of currency strategy and market research Jameel Ahmad.
"Risk-averse behaviour would likely lead to an extension of the cautious atmosphere that has plagued the financial markets over recent weeks.
"Risk aversion would also encourage another reduction in risk appetite, where emerging market assets as a whole would likely struggle to find buying support," he pointed out in a note.
All three major US indices ended higher at last Friday's close, with the tech-heavy Nasdaq and S&P 500 hitting their highest levels in two weeks as strong jobs growth dented the impact of the brewing United States-China trade war.
The Dow rose 0.7 per cent, the S&P 500 climbed 1.5 per cent, and the Nasdaq advanced 2.4 per cent during the week.
Even in the face of changing financial conditions, China is unlikely to weaponise the yuan, noted Bank of America Merrill Lynch economists Helen Qiao and Zhi Xiaojia.
"Even if Chinese policymakers see a weaker yuan as helpful to ease financial conditions and cushion a slowing economy when external demand faces new challenges, we do not believe it is in China's interests to weaponise its currency," they noted.
