Business

Busy week ahead with plenty of market-moving news

January factory output numbers due today, February PMI survey slated for release on Friday

Singapore sits in the period between the Finance Minister's Budget speech and the various ministries' debates on spending.

While taxpayers wait for more details on the slew of measures announced in last week's Budget, they can content themselves with the writing on the wall in the form of monthly economic data updates.

January factory output numbers are due this afternoon, and the February Purchasing Managers' Index (PMI) survey - an early indicator of production - is slated for release on Friday.

Trade numbers have already helped the economy to start 2018 on the right foot, with non-oil domestic exports for January recently clocking 13 per cent year-on-year growth.

ING Asia economist Prakash Sakpal said the two bits of information "will help show how gross domestic product (GDP) growth is shaping up in 2018".

Coupled with the latest Budget, they may also shed light on whether and when the Monetary Authority of Singapore will tighten monetary policy and strengthen the Singdollar.

The other elephant in the room, when it comes to monetary tightening, is Singapore's softer headline inflation.

The Consumer Price Index dropped year-on-year to zero per cent last month, from 0.4 per cent in December, according to figures out last Friday.

United Overseas Bank economist Francis Tan said the deferment of a much anticipated goods and services tax hike, to some time between 2021 and 2025, "could potentially result in lower inflation than our forecasts" for 2018.

"However, we expect the mildly expansionary Budget for the coming financial year to support economic growth and thus higher prices," he said.

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The other nerve-racking topic for market watchers is: What is going on with the US Federal Reserve's "will they, won't they" rate hike teasing?

Traders around the world have been thrown into confusion over the connections among US domestic inflation, interest rates, Treasury bond yields and stock market value.

Mr Eli Lee, head of investment strategy at the Bank of Singapore, said: "This more mature stage of the economic cycle - which we are now in - is still a healthy one for equities."

But he cautioned it is the end of a Goldilocks era where everything was "just right", and markets must now brace themselves for a period of greater volatility.

DBS economists Taimur Baig and Gundy Cahyadi noted that simultaneous spikes in equity and bond markets are rare, "likely reflecting an unusual late-cycle stimulus in the US".

"The persistence of a broadly weak dollar and stable rates can largely neutralise the significant drag stemming from equity markets, in our view.

"So far in this cycle, the US dollar's weakness has been a source of support for emerging markets," they wrote in a monthly report.

Inflationary anxiety in Washington comes with a side of tension over the political fallout from yet another school shooting, as well as the special counsel's investigation of US President Donald Trump's electoral campaign.

The probe has just added former campaign adviser Rick Gates to its tally of guilty pleas.

Elsewhere around Asia, Hong Kong releases its fourth-quarter GDP numbers on Wednesday. Chinese PMI numbers are also due this week.

For full listings of SGX prices, go to http://btd.sg/BTmkts

BUSINESS & FINANCE