Markets Insight

US remains the focus for markets amid uncertainty

Global stock markets were rattled last week by Mr Trump's immigration ban on refugees and travellers from seven countries. Still, optimism has returned to Wall Street after data showed US employment grew the most in four months in January, sending th
Global stock markets were rattled last week by Mr Trump's immigration ban on refugees and travellers from seven countries. Still, optimism has returned to Wall Street after data showed US employment grew the most in four months in January, sending the Dow Jones Industrial Average up by 0.94 per cent.PHOTO: AGENCE FRANCE-PRESSE

Asian markets, which could be hurt by Trump's policies, are also awaiting key data from region

Events in the United States will likely continue to take centre stage for investors here this week as uncertainties over the impact of President Donald Trump's controversial policies persist.

"As things stand, the US markets (will) continue to serve as a primary driver of sentiment for global equity markets," said IG market strategist Jingyi Pan.

"The past week has shown us not only a period of consolidation for prices, but a market that remains unsure under the clouds of uncertainty. This has been a theme occupying headlines for the past few months and even as we step into February."

Ms Pan added: "The week ahead does not necessarily promise less of this Trump-induced volatility."

Global stock markets last week were rattled by Mr Trump's immigration ban on refugees and travellers from seven countries, although the US government was forced to back-pedal on the order last Friday following a judicial ruling against it.

All eyes are on Mr Trump's foreign and economic policies, and how far he would follow through with his isolationist approach, which could hurt Asian economies.

Still, optimism returned to Wall Street last Friday after data showed employment in the US for January grew the most in four months, sending the Dow Jones Industrial Average up by 0.94 per cent.

For markets in Asia, besides the US, a number of key economic data from the region will also be closely watched this week. Data on Chinese exports which will be announced on Friday could offer a booster for markets here.

"China's exports likely recovered at the beginning of 2017 because of higher manufacturing shipments, while imports likely rose further, thanks to higher commodity prices," said a Moody's Analytics report.

"The trend is likely to show improvement, thanks to the improving global economy and the rise in commodity prices."

Elsewhere, Indonesia will be publishing its fourth-quarter gross domestic product figures tomorrow, while central bank meetings in Australia, Thailand, India and New Zealand will also be held starting from the same day.

At home, the Straits Times Index eased 2.14 points, or 0.07 per cent, to 3,041.94 last Friday - sliding 22.91 points or 0.75 per cent for the shortened week. Markets were closed last Monday for the Chinese New Year holiday.

Offshore and marine group Ezra Holdings last Tuesday halted trading in its stock, which last closed at 4.8 cents.

Last Friday, Ezra said it may have to take a US$170 million (S$239 million) write-down for its exposure to the troubled joint-venture company Emas Chiyoda Subsea, and is still reviewing its restructuring options. Its net current liabilities amounted to US$887.2 million for the year ended Aug 31, 2016.

An OCBC Investment Research report said that oil prices have rebounded since the Organisation of Petroleum Exporting Countries announced last November that it will cut production for the first time in eight years, which, in turn, saw investor interest return.

"Despite some returning interest in the sector in fear of losing out during an oil price rally, we also get the sense that investors in general are still cautious about entering the sector in a big way, due to conservative company guidance and the continued flow of some negative news," said the report.

OCBC maintained a "neutral" call on the sector, noting that a fair number of companies are expected to report impairments in the upcoming full-year results.

Meanwhile, more companies will release their earnings reports this week, including Singapore Airlines tomorrow, as well as Global Logistic Properties, Singtel and Sats - all on Thursday.

A version of this article appeared in the print edition of The Straits Times on February 06, 2017, with the headline 'US remains the focus for markets amid uncertainty'. Print Edition | Subscribe