The growing likelihood of a rate hike next month coupled with fears of a deepening Chinese economic slowdown are expected to weigh on Singapore shares this week.
Market sentiment will also be driven by the second-quarter earnings of several key Straits Times Index (STI) constituents, including commodities trader Noble Group, which releases its results today.
Investors are also expected to keep a close tab on the results of other commodity plays such as Golden Agri-Resources and Olam International, which will post their financial statements on Thursday and Friday respectively.
"The commodities market suffered a rout recently," said remisier Alvin Yong. "Investors are still looking for clues if these (commodities companies) can sustain earnings in a weak environment."
Plunging commodity prices have taken their toll on agribusiness group Wilmar International's second-quarter earnings, which came in slightly below forecast.
It reported last week that its revenue for the quarter was 11.7 per cent lower at US$9.28 billion (S$12.8 billion) due to lower commodity prices, but gross margin inched up to 7.7 per cent from 7.4 per cent.
Wilmar posted an 18.2 per cent rise in net profit to US$201.8 million despite lower revenue and a higher share of associates' losses.
OCBC Investment Research maintained a "buy" call on the counter.
It noted: "Wilmar believes it has achieved 'satisfactory' results in the second quarter despite the tough conditions and lower CPO (crude palm oil) prices. It is also cautiously optimistic that the second half-year performance will be satisfactory."
Other indicators that will be closely watched are Singapore's second-quarter gross domestic product numbers, which are due out tomorrow, and retail sales data, scheduled for release on Friday.
Casino operator Genting Singapore, which will report its results on Thursday, will also influence how the STI fares.
"Genting will give us an idea if the sustained tourist numbers are translating into earnings for the hospitality sector," Mr Yong said.
"If Noble, Olam and Singtel (which posts its first-quarter results on Thursday) surprise on the upside, the index could maintain or recapture the 3,280 level," he said.
"But if they post worse-than-expected earnings, that will weigh on the index unless, of course, China announces a massive stimulus plan this week." The STI ended last week at 3,196.66 points. Traders are watching for further stimulus moves from China after its July exports declined more than expected, hurt by a strong yuan and weaker demand from the European Union.
Overseas shipments fell 8.3 per cent from a year earlier, the Chinese Customs administration said over the weekend. The reading was well below the estimate for a 1.5 per cent decline in a Bloomberg survey and compared with an increase of 2.8 per cent in June.
Imports dropped 8.1 per cent, widening from a 6.6 per cent decrease in June, leaving a trade surplus of US$43 billion. It came despite a few bright spots, including the highest monthly steel exports since January. Along with weak domestic investment, subdued global demand is putting China's growth target of about 7 per cent this year at risk.
The government has rolled out pro-expansion measures, including special bond sales to finance construction, but has held off weakening the yuan.
Another factor that may impact the Singapore market is the relentless strengthening of the US dollar against most Asian currencies, including the Singapore dollar, as continued growth in the United States jobs market raised the likelihood of a rate hike by next month.
US Labour Department data showed employers added 215,000 workers last month. Revisions showed employers added 6,000 more jobs in May and 8,000 more in June than previously estimated.
The unemployment rate held steady at 5.3 per cent last month.