Markets Insights

US trade talks in Beijing, Brexit in focus this week

The People's Vote march in central London on Saturday, in which EU supporters called for the government to give Britons a vote on the final Brexit deal.
The People's Vote march in central London on Saturday, in which EU supporters called for the government to give Britons a vote on the final Brexit deal.PHOTO: REUTERS

In Singapore, a slew of economic data for Feb has been lined up for release this week

Geopolitics and trade are likely to hold investors' attention during this week of trading in Singapore and Asia.

Of particular interest will be the the next round of trade talks between the US and China, which will see US trade representative Robert Lighthizer and Treasury Secretary Steven Mnuchin leading the US trade delegation to Beijing on Thursday for a two-day negotiation with the Chinese team.

The talks come at a time of growing concern over the economic weakness in the United States, though the Federal Reserve's dovish stance on interest rate should lessen pressures on US companies and the economy.

Brexit also remains a concern to investors in Asia. The EU last Friday approved a re-set of the Brexit timetable with the United Kingdom's Parliament likely to vote on a course of action this week.

Compounding the concern with Brexit, the pound has been jittery since the events of the past two week.

DBS Bank's FX (foreign exchange) strategist Philip Wee said in a report: "Until a favourable solution is found, GBP/USD has no incentive to break above its 1.30-1.34 range established since mid-February." He sees the GBP/USD pair falling below 1.30 this year.

The Singapore stock market may start the day lower, getting its cue from a disappointing session on Wall Street.

The New York Stock saw a sell-off last Friday, amid growing evidence of the global growth slowdown. As a result, the three key indices saw the gains made earlier in the week wiped out.

The Dow Jones Industrial Average fell 460.19 points, or 1.77 per cent, to 25,502.32; the S&P 500 lost 54.17 points, or 1.90 per cent, to 2,800.71; and the Nasdaq Composite dropped 196.29 points, or 2.5 per cent, to 7,642.67.

In Singapore, a slew of economic data for February has been lined up for release this week.

The consumer price index (CPI) figures are due to be made public today, followed by the industrial production numbers tomorrow. The bank lending and monetary aggregates are scheduled to be out on Friday.

On the CPI figures for February, Mr Jameel Ahmad, FXTM's global head of currency strategy and market research, said that it "should help investors gain a clearer picture on the Monetary Authority of Singapore's (MAS') monetary policy outlook, ahead of the central bank's meeting in April".

Bearing in mind that central banks in the US and Europe are adopting dovish stances and a low inflation outlook mooted, Mr Ahmad added that such conditions "would likely offer the MAS some reprieve from policy moves, having already tightened twice in 2018".

Elsewhere in Asia, few economic data releases are on the cards this week.

But Friday will see a number of economic data from Japan for February, including the jobless rate, industrial production, housing starts and construction orders.

Among central banks in the Asia-Pacific, there's just the Reserve Bank of New Zealand monetary policy decision on Wednesday. It is expected to keep rates unchanged, with UOB saying in its weekly outlook that the central bank is expected to hold rates at "least until early 2020".

In Europe, the final fourth-quarter 2018 gross domestic product figures are due tomorrow in France and Thursday in the UK.

Meanwhile, preliminary March CPI in Germany is due on Wednesday and the Euro zone's on Thursday. In the US, January balance of trade data is out on Wednesday and the final print of fourth-quarter GDP data is scheduled on Thursday.

A version of this article appeared in the print edition of The Straits Times on March 25, 2019, with the headline 'US trade talks in Beijing, Brexit in focus this week '. Print Edition | Subscribe