Markets Insights

Geopolitics, economic data in focus this week

A raft of data out this week could help steer US and UK monetary policy, while car registration figures may illustrate how tariffs are impacting the auto sector.
A Gap retail store in Beijing. China will release its remaining October data this week, while the United States' October consumer price index is due out on Wednesday, advance retail sales on Thursday and October industrial production on Friday.
A Gap retail store in Beijing. China will release its remaining October data this week, while the United States' October consumer price index is due out on Wednesday, advance retail sales on Thursday and October industrial production on Friday.PHOTO: AGENCE FRANCE-PRESSE

Busy week ahead as S'pore gears up for several regional summits

No clear winners seem to be emerging in the US-China trade war with markets around the world, including Wall Street, dragged down late last week by signs of slowing Chinese growth.

Robust export data earlier in the week failed to dispel worries about the impact of tariffs on the Chinese economy, with analysts chalking up the numbers to traders rushing shipments to the United States before higher levies kick in next year.

Then on Friday, China's producer price index showed factory-gate inflation slowing in October, the fourth consecutive month of decline, due to reduced domestic demand and lower industrial activity.

"When you look overseas, there's not just concern about a global slowdown, but a global recession that might be brewing," said Mr Jerry Braakman, chief investment officer of First American Trust.

"When overseas markets slow down, the US economy might be okay, but global corporations, with currency translation and revenue growth challenges, get hit."

US markets slid on the news, with the Dow Jones Industrial Average closing lower for the first time in five days. It lost 0.8 per cent, the S&P 500 fell 0.9 per cent and the Nasdaq plunged 1.7 per cent.

As Singapore prepares to host several regional summits in a busy week ahead, geopolitics and economic data will weigh on investor minds, although the next political event most likely to move markets remains the meeting between US and Chinese leaders at the G-20 summit later this month.

TRADE TENSION

It is worth remembering that we still have US-China trade tension complication to contend with. This is over and above the threat of tightening conditions.

IG MARKETS ANALYST PAN JINGYI, advising investors to view the data releases over the coming days through the lens of trade tensions. Key US and China economic figures are due to be released this week.

Leaders from the Asean countries as well as China, Japan, South Korea, Russia and the US will be here for three main events: the 33rd Asean Summit (Nov 11-15), Asean Business and Investment Summit (Nov 12-13), and 13th East Asia Summit (Nov 14-15), as well as other Asean bilateral summits.

Investors should view the data releases over the coming days through the lens of trade tensions, noted IG Markets analyst Pan Jingyi. "It is worth remembering that we still have US-China trade tension complication to contend with," she added. "This is over and above the threat of tightening conditions."

The US' October consumer price index due out on Wednesday is expected to report an uptick, supporting the Federal Reserve's plans for further interest rate increases.

Other upcoming US highlights include advance retail sales on Thursday and October industrial production on Friday.

China will release its remaining October data this week, while Singapore's September retail sales data will be out today and October non-oil domestic exports (Nodx) figures on Friday.

UOB Global Economics and Markets Research expects a significant 10 per cent year-on-year contraction for Nodx, compared with 8.3 per cent growth in September.

This would come on the back of a steeper decline in electronics and a significant high base effect as Nodx expanded 20.5 per cent year on year in October last year.

A version of this article appeared in the print edition of The Straits Times on November 12, 2018, with the headline 'Geopolitics, economic data in focus this week'. Print Edition | Subscribe