Business

Traders to keep close watch on Budget, Trump and Fed

All eyes will be on Finance Minister Heng Swee Keat today as he presents Singapore's Budget 2017, which is expected to address both near-term and longer-term goals.

Traders will keep a close watch on the sectors most impacted by the Budget even as they continue to keep an eye out for clues on market-moving news elsewhere.

Some trading inspiration may come from Wall Street, where all three major stock indexes closed at record levels on Friday night, with the Dow Jones Industrial Average extending its record-breaking run to a seventh session.

It was up 0.02 per cent, and the S&P 500 climbed 0.17 per cent while the Nasdaq Composite rose 0.4 per cent on last week's last trading day.

Yet, the impact on the local bourse may be muted ahead of the long US weekend, although no one dares discount the likelihood of more remarks from US President Donald Trump that could scare or inspire markets.

Meanwhile, investment site Motley Fool Singapore said global markets are keeping their cool despite fears of a global trade war, among others, triggered by Mr Trump's rhetoric.

"They know the only predictable thing about Trump is his unpredictability. Anybody who adjusts their portfolio in line with what they think 'The Donald' might do next is making a costly mistake," it said.

Not everyone is like-minded.

Credit Suisse, in its monthly Asia-Pacific investment strategy, pointed to the "jarring reality" that Mr Trump appears to be a man of his word; in other words, US-Asia trade friction could crank up.

Relative to the previous week, there will be light key data coming out of Asia this week, except for fourth-quarter gross domestic product data to be released by Thailand and Hong Kong. The US, the European Union and Japan are set to release their preliminary manufacturing data.

Fresh views from the series of US Federal Reserve member appearances, however, cannot be discounted, according to IG Markets strategist Jingyi Pan.

This follows Fed chair Janet Yellen's hawkish remarks that it would be unwise to wait too long to hike interest rates.

"To be clear, the Fed chair seems a lot less cautious than how she sounded in the past two years. Still, market players (in the currency markets) remained stubbornly unconvinced that the Fed is going to move in March, with the Fed funds future pricing in only 36 per cent of a move next month," said Maybank Research in a note.

"The market could find February Markit manufacturing PMI and January new and existing home sales to be key US indicators," said Ms Jingyi.

She added that "new feeds" could also come primarily from the Federal Open Market Committee meeting minutes, which are to be released on Wednesday night.

The British parliament returns from its break where the House of Lords will begin the debate on the Brexit bill.

The Straits Times Index got much love over the Valentine week, rising seven points and bringing its year-to-date gains to nearly 8 per cent.

Asian markets have been buoyed by US dollar weakness.

That, plus comforting economic data out of China, has supported the sharp rebound in markets, pointed out Credit Suisse.

"However, market participants remain uncertain as they struggle to put together the narratives of underlying economic recovery versus potential trade risks," it added.

anitag@sph.com.sg

This article appears in The 
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