Markets Insights

Singapore market likely to take cues from Wall Street

Markets' performance last week was affected somewhat by Brexit developments. But the less talked-about drivers, such as the ongoing US-China trade dispute, should continue to have a bearing on investment decisions this week.
Markets' performance last week was affected somewhat by Brexit developments. But the less talked-about drivers, such as the ongoing US-China trade dispute, should continue to have a bearing on investment decisions this week.PHOTO: AGENCE FRANCE-PRESSE

Separately, four Asian central banks are expected to announce monetary policies

It is going to be a busy week ahead as central banks make monetary policy decisions and more economic data is released.

Markets' performance last week was affected somewhat by Brexit developments and the outcomes from China's National People's Congress.

But the less talked-about drivers, such as the ongoing US-China trade dispute, should continue to have a bearing on investment decisions this week.

Singapore's market, especially the tech stocks, may get their cues from Wall Street.

Last Friday, Wall Street - especially its tech players - took to updates that Washington and Beijing were making progress on trade talks positively. This came despite US data showing that manufacturing output had fallen for a second straight month in February.

The Dow Jones Industrial Average rose 0.54 per cent to 25,848.87, the S&P 500 gained 0.50 per cent to 2,822.48, and the Nasdaq Composite added 0.76 per cent to 7,688.53. The S&P 500 posted its best weekly gain since the end of November, and Nasdaq had its best weekly gain so far this year.

BALANCE SHEET REDUCTION

The case for a 'patient' approach before the next FOMC policy move has been clearly spelt out and the focus of the March FOMC will likely be the Fed's balance sheet reduction programme.

UOB GLOBAL ECONOMICS AND MARKETS RESEARCH

Wall Street's performance may result in a positive start for Singapore-listed tech counters that have significant exposure to China, as well as cyclical stocks.

Last Friday's trading session in Singapore also saw an uncharacteristically high turnover, with trading clocking in at 1.59 billion shares worth $1.82 billion.

Singapore Exchange market strategist Geoff Howie said the impact of FTSE Index rebalancing on the Singapore bourse accounted for much of the vibrant turnover towards the end of Friday's session.

However, he noted: "There were no changes to the Straits Times Index in the quarterly rebalancing which takes effect on the Monday open."

The Singapore economic docket is light this week, with just February's non-oil domestic exports figures due this morning.

IG market strategist Pan Jingyi noted that February figures might trail the weak trade numbers out of China in the previous week, in another sign of the effects of US-China trade issues weighing on the global economy.

Investors will also be looking to the US' Federal Open Market Committee (FOMC) meetings on Wednesday for leads.

In its weekly outlook, the UOB global economics and markets research team said: "The case for a 'patient' approach before the next FOMC policy move has been clearly spelt out and the focus of the March FOMC will likely be the Fed's balance sheet reduction programme."

Elsewhere in Asia, a slew of economic data is due, mostly from midweek on. Japan will release February trade data numbers today. On Wednesday, data for South Korea's February producer price index and Malaysia's February consumer price index (CPI) will be released. And Japan will release its February CPI data on Friday.

The week will also see four central banks in Asia - Thailand, the Philippines, Taiwan and Indonesia - making monetary policy decisions.

While most of the central banks are likely to keep policy rates unchanged, UOB said the Philippine central bank, with a new governor in charge, "will be more closely watched as it may announce a 25 basis points rate cut to its overnight borrowing rate to 4.5 per cent".

In Europe, UK January employment data is due tomorrow and a number of inflation data measures on Wednesday.

Preliminary Markit Purchasing Managers' Index for the euro zone and its constituent economies will be released on Friday.

In the US, reports on January factory orders and durable goods orders are due tomorrow while Friday will see March preliminary Markit PMI figures.

Markets in Japan will be closed on Thursday.

A version of this article appeared in the print edition of The Straits Times on March 18, 2019, with the headline 'S'pore market likely to take cues from Wall Street '. Print Edition | Subscribe