Markets Insight

Week ahead for markets unlikely to be dull

A banner week for Wall Street drove regional and US indices to new highs. Hong Kong and Singapore shares ended last week on a sweet note amid strong earnings and higher trading volumes.
A banner week for Wall Street drove regional and US indices to new highs. Hong Kong and Singapore shares ended last week on a sweet note amid strong earnings and higher trading volumes.PHOTO: AGENCE FRANCE-PRESSE

Investors eye local earnings, US and China data; bourse set for pause after Wall St banner week

The share market partying might have to take a pause this week to give investors a breather after a banner week that drove regional and United States indices to new highs.

Hong Kong and Singapore shares ended last week on a sweet note amid strong earnings and higher trading volumes, noted analyst Margaret Yang of CMC Markets.

"Earnings from Genting Singapore, Singapore Airlines, CapitaLand, City Developments, UOL, Yangzijiang Shipbuilding and Sats have all surprised in the positive way," she said. "Despite some volatility that came through the US market as a result of uncertainties surrounding the tax Bill, Asian markets have exhibited resilience against that headwind."

Even after concerns over the delayed US tax reform, the benchmark Straits Times Index still managed a 1.12 per cent rise for the week despite losing 3.81 points to close at 3,420.1 on Friday.

Ms Yang expects the market to stay in positive territory this week given "the backdrop of positive earnings and relative cheap valuation".

If the economic calendar is anything to go by, this week will likely be anything but dull as investors watch out for local earnings and data from China and the US.

Still, following Wall Street's performance last Friday, Singapore equities may be off to a slow cha-cha today. The Dow Jones and S&P 500 snapped an eight-week winning streak - their longest since 2013 - while the Nasdaq ended a six-week one.

SHOWING RESILIENCE

Despite some volatility that came through the US market as a result of uncertainties surrounding the tax Bill, Asian markets have exhibited resilience against that headwind.

MS MARGARET YANG, analyst at CMC Markets.

Some analysts have said that stocks in the capital goods and industrials sector, such as Keppel, Sembcorp Industries and Wilmar International, might benefit from a spillover effect following "early cyclicals" like tech stocks and banks.

Earnings reports from Wilmar and Golden Agri-Resources this week will show how true this is.

Ms Yang said Chinese industrial production and retail sales data, as well as German and euro zone flash gross domestic product (GDP) estimates are expected tomorrow.

The rather upbeat mood could be dampened by data from the US which dominates from Wednesday. The numbers include the consumer price index, retail sales, weekly petroleum status, industrial production and housing reports.

US President Donald Trump's Asia tour is winding down with the Asean-US summit in Manila today.

He told the Asia-Pacific Economic Cooperation forum in Vietnam last week that the US will no longer tolerate "chronic trade abuses".

Tomorrow, he will meet President Rodrigo Duterte of the Philippines and join the East Asia Summit to discuss security issues in the region.

More importantly, investors will look out for signs of what is to come in terms of US monetary policy, now that Mr Jerome Powell has been picked to replace Federal Reserve chair Janet Yellen.

The move comes at a time when some of the Fed's most influential members are leaving, including Mr Bill Dudley, president of the powerful Federal Reserve Bank of New York, and Mr Stanley Fischer, the Fed's vice-chair of the board of governors.

So remarks from some Fed speakers may clear the uncertainty.

Dr Yellen for one is slated to speak on a European Central Bank panel alongside ECB chief Mario Draghi, Bank of Japan governor Haruhiko Kuroda and Bank of England governor Mark Carney.

A version of this article appeared in the print edition of The Straits Times on November 13, 2017, with the headline 'Week ahead for markets unlikely to be dull'. Print Edition | Subscribe