Business

Macro data, MSCI review on investors' radar this week

Central bank meetings in the Asia-Pacific region (no surprises expected), a slew of macro data including manufacturing activity out of major economies and a key MSCI review will be the chief focus for the local bourse this week.

Wall Street's showing last Friday with key US stock indices ending largely flat after the previous day's rout on large-cap technology stocks could also set the tone for the start of the week.

The Dow Jones Industrial Average closed up 0.11 per cent while the S&P 500 finished 0.03 per cent up.

The Nasdaq Composite was the weakest performer as it dipped 0.2 per cent as technology stocks faced renewed pressure amid concerns that they were overvalued.

Central bank meetings will unfold in Taiwan, the Philippines and New Zealand - although no one expects a change in interest rates.

"A week centred on central bank meetings from advanced economies gives way to more monetary policy meetings within the Asia-Pacific region," said IG market strategist Pan Jingyi.

Last week's limelight was on central bank meetings in developed economies, including the Federal Reserve, Bank of England (BOE) and the Bank of Japan (BOJ) with no surprise outcome although they signalled the "diverse" views on the diverging pace of how their economies are moving, Ms Pan pointed out.

On one end, the BOE tilted to follow the Fed in a more hawkish stance.

On the other end, the BOJ had averted discussions of exit strategy, choosing to remain on the accommodative end of monetary policy.

"With the theme remaining on growth momentum, the slew of data to be released over the week could be welcoming in updating the market on economic performances," she added.

The US will release latest sales figures for new and previously-owned homes which could give a clearer indication of the strength of the world's largest economy following the release of a mixed set of data in recent weeks.

Inflation data will also be released across multiple economies in the region.

The local Singapore market could find the focus on May industrial production data after last week's non-oil domestic exports (NODX) surprise.

The Republic's NODX fell year on year in May for the second month in a row. The dip of 1.2 per cent beat expectations of a 5.6 per cent contraction.

In a June 16 report, DBS Group Research remarked that Singapore's growth outlook is sanguine with a 2.8 per cent GDP growth forecast this year and 2.5 per cent in 2018.

The house has maintained its view for a near-term cap of the key Straits Times Index at 3,274.

"The trend is turning sideways from 3,185 to 3,275. In the event the 3,185 fails, weakness to 3,130 is seen before the correction ends. A year-end objective of 3,350 remains possible," it said.

The MSCI's annual market classification review is expected to be a key event on investors' radar, more specifically whether China's domestic A-shares will be included in the world's widely followed emerging markets stock index.

Last June, the US index provider delayed the inclusion of the A-shares for the third time into the benchmark index, citing worries over regulation and accessibility for global investors.

"A successful put-through of these yuan-denominated A-shares into the emerging market index could significantly raise optimism for further liberalisation of China's stock market, thereby inviting demand for the stocks and would be seen as a plus for both China and regional markets," said Ms Pan.

Investors will also be closely watching the Brexit discussions early in the week, a key risk event that has become a lot harder to predict after the shocking UK election outcome that resulted in a hung Parliament.

This article appears in The Business Times today. For full listings of SGX prices, go to http://btd.sg/BTmkts

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