Markets Insights

Quieter week expected as US winds down for Thanksgiving

The brewing domestic tensions in Britain over a draft Brexit agreement are less impactful on Asian markets but still something to watch out for this week. The British pound plunged last week after three British Cabinet ministers resigned.
The brewing domestic tensions in Britain over a draft Brexit agreement are less impactful on Asian markets but still something to watch out for this week. The British pound plunged last week after three British Cabinet ministers resigned.PHOTO: AGENCE FRANCE-PRESSE

S'pore's final Q3 GDP, Oct CPI, US housing among data releases

A quieter week awaits global equities, in contrast to the ups and downs of the previous week owing to the ongoing trade spat between the United States and China, a slump in oil prices and a technology stock rout led by worries on the impact of a slowdown in iPhone sales on tech suppliers.

With US markets set to enter a short Thanksgiving holiday week, Wall Street capped a volatile trading session last week by closing mostly higher on Friday, following optimistic remarks by US President Donald Trump that gave investors some hope that the trade feud with China may ease in the near term.

The brighter news surrounding China-US trade talks helped provide a fillip for Asian markets heading into the end of last week, and will certainly be something to look out for as the Group of 20 leaders' summit to be held in Buenos Aires from Nov 30 to Dec 1 looms closer.

Given the "multitude of permutations" regarding the outcome of meetings between Mr Trump and Chinese leader Xi Jinping, expect markets to be "jittery and sensitive" on any updates, said IG's market strategist Pan Jingyi.

Perhaps less impactful for Asian markets, but certainly one to keep an eye out for, are the brewing domestic tensions in Britain over a draft Brexit agreement.

The British pound plunged last week after three British Cabinet ministers resigned. "Market participants seem to believe that the draft agreement in its current terms is not likely to be approved by the (British) Parliament. However, expect (Prime Minister) Theresa May to fight until her last breath," wrote FXTM's chief market strategist Hussein Sayed in a note.

Options now are open to a no-confidence vote, a new election, new referendum, and no-Brexit deal, but when the critical moment comes, no one knows what could happen, Mr Sayed said, adding: "All that we know is volatility in UK assets will hit the roof in the days and weeks to come."

In Singapore, the Ministry of Trade and Industry will release its final print for third-quarter gross domestic product (GDP) on Thursday.

In its outlook note, United Overseas Bank (UOB) said that the surprise 0.2 per cent year-on-year decline in September industrial production meant that Q3 manufacturing growth is now lower at 4 per cent year on year, compared with the 4.5 per cent reported earlier in the advance Q3 GDP estimates last month.

"In turn, we expect Q3 GDP to be revised lower to 2.4 per cent year on year (from the preliminary estimate of 2.6 per cent)," UOB said.

Meanwhile, Singapore's October consumer price index (CPI) will be released on Friday. Headline inflation will likely edge higher to 0.8 per cent year on year (from 0.7 per cent in September) while the Monetary Authority of Singapore core inflation (which excludes private road transport and accommodation) should stay unchanged at 1.8 per cent year on year, said UOB.

Overseas, the key data docket is relatively light. The US will release figures on housing starts, durable goods orders and existing home sales, which will be closely monitored as further signals on the health of the world's largest economy.

A version of this article appeared in the print edition of The Straits Times on November 19, 2018, with the headline 'Quieter week expected as US winds down for Thanksgiving'. Print Edition | Subscribe