Last Friday's surprise easing of some property cooling measures and a firmer close on Wall Street over the weekend will likely influence trading activity on the Straits Times Index when it opens today.
Local stocks are likely to take heart from the Dow Jones Industrial Average, which closed up 0.21 per cent after the United States economy exceeded expectations with the surprise addition of 235,000 jobs last month. The data confirmed the strength of the world's biggest economy and sets the stage for the Federal Reserve to raise interest rates this week.
The STI ended the week up nearly 0.4 per cent to 3,133.35 as property stocks jumped on news that some property curbs are to be loosened slightly. Among other measures, the seller's stamp duty would be reduced by shortening the holding period to three years from four years previously, and by lowering the rate by four percentage points for each tier.
But the market gave back some gains after noting that the new regulations were calibrated in nature, and there are no changes to the additional buyer's stamp duty (ABSD), targeted at those who own multiple properties, which is what many home owners and potential buyers have the biggest issue with.
Still, banks could continue to benefit from the news.
RHB Securities Research has a "buy" call on United Overseas Bank, saying the bank could be a key beneficiary as it has a large exposure to property-related loans.
"OCBC and UOB's exposure to housing loans stands at 27 per cent each, while DBS is at 21 per cent, " the broker noted. Also on traders' radar is Singapore's February non-oil domestic exports data due out on Friday, with economists widely forecasting further growth.
DBS Group Research maintained an overweight call on Singapore equities as their regional standing appears attractive.
It cited cheap valuations, apparently improving China and US relations from their diplomatic lows, and the Singapore Government's focus on long-term sustainability, which should help fuel the rebound in the local economy.
"We now expect earnings growth of 9.3 per cent this year and 6.1 per cent next year for STI stocks. The revision trend has turned positive for the first time in two years, with earnings upgrades seen coming from banks and industrial sectors," DBS said.
A slew of central bank meetings this week will also likely generate interest in the market.
These include the key United States Federal Reserve's Open Markets Committee (FOMC) meeting on Tuesday and Wednesday US time, at which an interest rate hike is almost certain.
The market's focus, however, will likely be on what the Fed will say about its plans for future rate hikes.
Also affecting markets are possible clues on the US government's spending plans from President Donald Trump's first budget outline, which will be due on Thursday.
Meanwhile, UOB KayHian maintained an overweight call on local real estate investment trusts, saying it expected a muted response to the upcoming US Federal Reserve rate hike. "We view any share price weakness on rate hike concerns as an opportunity to accumulate at attractive levels.
"The impact of an interest rate hike on S-Reit distributions is minimal in the near term due to long debt maturity periods and high proportion of fixed-rate debts," the broker said.
