Markets Insights

Key data releases to mark turn of the year

Figures from US, China set to affect market amid an expected slow start to the week

Global equity markets made a surprise post-Christmas comeback last week. Have they bottomed out amid so much volatility? As we usher in the new year, the search for clarity continues.

With New Year’s Day falling tomorrow, a slow start to the week is expected. That said, this week packs some important releases from the US, including December’s ISM manufacturing reading and payrolls update – these are likely to affect the market, noted IG market analyst Pan Jingyi.

“December’s payrolls and unemployment are expected to once again fall in line with the recent positive showings, while wage inflation is expected to improve, doing nothing more than affirming the Fed’s view on strong economic conditions.”

She added: “2018 may be remembered as the year with some of the best earnings, but also the worst market plunges amid the ever-so-often political and geopolitical influences. Going into 2019, there is little doubt that we would continue to find updates from many of these issues lingering.”

Indeed, by the closing bell last Friday, US stocks had finished a choppy session mostly lower, concluding a raucous week that saw Wall Street’s worst Christmas Eve drop, followed by a historic rebound.

The Dow slipped 0.3 per cent to 23,062.40 on Friday. The S&P 500 fell 0.1 per cent to 2,485.74, and the Nasdaq edged up 0.1 per cent to 6,584.52. Energy stocks were the biggest losers in the S&P 500, while tech stocks, including Facebook and Microsoft, dipped almost 1 per cent.

With one trading session left for the year, all three indexes are well into the red.With one trading session left for the year, all three indexes are well into the red.

Oanda’s head of Asia-Pacific trading Stephen Innes noted that Singapore was not the only market hobbling into the year end with traders remaining “wholly perplexed” by the wild price swings in US stocks.

“Markets are in desperate need of liquidity, which should start to return... in earnest next week as institutional traders return from an extended holiday on Jan 2,” he said.

Nonetheless, he expects volatility to remain as Singapore investors will be squarely focused on China’s manufacturing Purchasing Managers’ Index (PMI) data, due for release this morning. Given that China’s economic slowdown is one of the significant risks facing global markets out of the gate in 2019, he said this critical release could set the tone of the market for next month.

Closer to home, FXTM analyst Lukman Otunuga believes Singapore investors will direct attention towards the usual bank lending data for last month, scheduled for release this morning.

“There will be a special focus on the fourth-quarter GDP (gross domestic product) report on Wednesday, which should provide fresh insight into the health of the Singapore economy. With the manufacturing PMI for December released later in the week, it will certainly be an eventful trading week for the Singapore dollar,” he said.

Mr Otunuga added that while positive domestic economic data could boost the local currency, he felt the outlook would still be shaped by external factors such as global trade developments and the US dollar’s performance.

On the commodities front, Phillip Futures commodities analyst Benjamin Lu is bullish on gold for the week ahead. For oil, he expects Brent crude to range between US$53 and US$58 per barrel.

“Choppy trading conditions will continue to encapsulate pricing action for crude oil, as traders weigh between persistent economic headwinds and Opec (Organisation of the Petroleum Exporting Countries) production cuts in the first quarter of 2019,” he said.

A version of this article appeared in the print edition of The Straits Times on December 31, 2018, with the headline 'Key data releases to mark turn of the year'. Print Edition | Subscribe