Trade and the United States Federal Reserve meeting will continue to dominate headlines in the week ahead, with the new tranche of tariffs on Chinese imports to take effect today.
The Federal Open Market Committee decision is due early Thursday morning (Singapore time), followed by Fed chair Jerome Powell's press conference. Analysts' consensus points towards a 25 basis point rate hike, with no major surprises expected there. Instead, it is the economic forecast that will be worth paying attention to, and market observers expect projections to sound more hawkish than dovish.
The S&P 500 and Dow Jones Industrial Average reached record highs last Friday ahead of today's major sector reshuffle, capping a week that largely shrugged off trade worries.
The Dow rose 0.32 per cent to 26,743.5, the S&P 500 lost 0.04 per cent to 2,929.67, and the Nasdaq Composite fell 0.51 per cent to 7,986.96. Analysts attributed the Dow's gains to solid US economic data and greater investor optimism after fresh actions from the US and China did not seem to lead to repercussions as severe as many had feared.
Meanwhile, trading volume spiked to the highest level since Feb 9 in anticipation of the S&P 500 sector change, where various stocks, including big names like Facebook, Alphabet and Netflix, will be moved to a rebadged communication services sector. Other US data worth keeping a lookout for include September's consumer confidence index tomorrow and the final reading for the second-quarter gross domestic product on Thursday, followed by the Fed balance sheet data on Friday.
US trade and energy markets could also be in focus, with a push to reach an agreement on the North American Free Trade Agreement ahead of a Friday US deadline, and President Donald Trump to talk about Iran at the United Nations.
IG market strategist Pan Jingyi noted that the resilience in the US market is evident, and that the breakout further renews momentum for the market. That said, she warns that this is "not yet cause for celebration" as uncertainties remain.
For the Singapore market, August's consumer price index and industrial production data will be out today and on Wednesday, respectively. The end of the month also brings the usual bank lending and monetary aggregates data for August on Friday.
Added Ms Pan: "The local Straits Times Index exhibited a substantial recovery into the later half of the week, with the leap back above the 3,200 handle that would likely serve as a support in the coming week above the 3,114 stronghold."
Also on the agenda are Mid-Autumn festivities which will continue well into the week, with the China and Taiwan markets closed today, and Hong Kong out for tomorrow. Meanwhile, South Korea is celebrating Chuseok till Wednesday. It will also be a "Super Thursday" this week, with monetary policy decisions expected on the same day from four major Asia-Pacific central banks, namely New Zealand, the Philippines, Indonesia and Taiwan, noted United Overseas Bank in its weekly outlook.
On the currency front, the pound sank to US$1.3078 after Prime Minister Theresa May said the United Kingdom and the European Union were at an impasse over Brexit, while the greenback firmed to 112.52 yen on Friday, and the euro edged down to US$1.1747.
Said FXTM's global head of currency strategy and market research Jameel Ahmad: "With the exception of the latest inflation report, the economic calendar from the side of Singapore is thin in volume over the upcoming week. This means that the Singapore dollar will seek guidance from the US dollar when it comes to any potential fluctuations."
Nonetheless, he believes the Singapore dollar will benefit from rising consensus that the greenback has peaked and may soon enter into a period of sustained weakness.