Markets Insight

Quiet week expected for Asian stocks after CNY break

Several central banks will be holding monetary policy meetings this week, including the US Federal Reserve and the Bank of Japan (above). Neither is expected to make major announcements, but investors will be keen to see if the Fed has any comments t
Several central banks will be holding monetary policy meetings this week, including the US Federal Reserve and the Bank of Japan (above). Neither is expected to make major announcements, but investors will be keen to see if the Fed has any comments to make on the new administration.PHOTO: AGENCE FRANCE-PRESSE

Asian stock markets could be in for a quiet week, given closures for the Chinese New Year holidays, though investors remain watchful over the slew of edicts emerging from United States President Donald Trump.

The Singapore bourse is closed today, with trading set to resume tomorrow.

Several central bank meetings will be on the radar, including the US Federal Open Market Committee meeting on Thursday.

Markets are not expecting a rate hike this time around, but will be gauging the Fed's tone on future rises - and any comments it might make on the new US presidency.

Regional equities have remained resilient despite concerns over Mr Trump's trade-protectionist tone, clocking solid gains last week.

MARKET TEST

The sustainability of the bullish sentiment will be tested in February, when two-thirds of the blue-chip earnings are announced.

MS MARGARET YANG, market analyst at CMC Markets Singapore, on whether the STI will continue to rally.

At home, the benchmark Straits Times Index (STI) rose 13.07 points, or 0.43 per cent, to 3,064.85 during half-day trading last Friday - marking an impressive weekly increase of 53.77 points or 1.79 per cent.

The gains had much to do with Wall Street holding above the milestone 20,000 mark overnight.

The STI has rallied 6.39 per cent since the year kicked off, making it the best-performing market in Asia so far this year.

"This rally has partially priced in favourable corporate earnings for the last quarter and higher crude oil prices this year," CMC Markets Singapore market analyst Margaret Yang told The Straits Times.

"But the sustainability of the bullish sentiment will be tested in February, when two-thirds of the blue-chip earnings are announced," she said, noting other key risks include rising political tensions between the US and Mexico, as well as worries over global free trade, given Mr Trump's protectionist stance.

The corporate earnings season is under way here. Keppel Corp last Thursday posted a 48.6 per cent slide in net profit for last year to $783.9 million - its lowest since 2006 - sending the counter down 12 cents to $6.27 last Friday.

A number of real estate investment trusts (Reits) announced results earlier in the week, including Ascendas, which reported a 1.2 per cent rise in third-quarter distribution per unit (DPU) to 3.993 cents. Ascott Residence Trust said its fourth-quarter DPU fell 7 per cent to 1.93 cents, after adjusting for a one-off item.

Firms due to release corporate results this week include SIA Engineering and StarHub, both on Friday.

Traders here will also be keeping an eye on regional economic data, such as China's official manufacturing Purchasing Managers' Index (PMI) on Wednesday and the private Caixin manufacturing PMI gauge on Friday.

"Investors will be searching for signs that stabilisation of manufacturing conditions remains under way," said IG market strategist Jingyi Pan in a note.

Japan is releasing data on December retail sales, housing starts and industrial production early this week. The Bank of Japan is meeting tomorrow, but is likely to keep its monetary policy unchanged.

A version of this article appeared in the print edition of The Straits Times on January 30, 2017, with the headline 'Quiet week expected for Asian stocks after CNY break'. Print Edition | Subscribe