Domestic conditions may keep market alive

Singapore traders return to work today after the Good Friday public holiday, but other bourses such as Australia and Hong Kong will stay shut for Easter Monday, alongside key European Union peers.

Still, that does not necessarily mean a quiet day ahead here.

Last week was an eventful one worldwide, marked by trade skirmishes between the United States and China, even as North Korea made peace overtures to its neighbours, and Japan reeled from a cronyism scandal that hit close to home for Prime Minister Shinzo Abe.

Technology stocks were a drag on Wall Street, too, as Facebook was caught in multiple scandals over its commercial use of individuals' data - and that the data could have been been handled nefariously by political brokers.

Whether this casts a pall over loss-making Spotify's direct listing in New York on Tuesday could show which way the wind is blowing for erstwhile tech start-up darlings.

All of this drama is likely to carry over into the coming days here.

Given that global shenanigans inevitably land a punch on the little red dot, economists are watching with caution the upcoming Monetary Authority of Singapore (MAS) decision on the Singdollar's appreciation rate.

Singapore-based Rob Carnell, chief economist and research head in the Asia-Pacific at ING, noted after the recent release of February's industrial production figures: "Having recently chopped out our forecast of a MAS policy tightening at the April meeting, it is a little disconcerting to see any release that beats expectations.

"But against the threat of trade wars and some previously very disappointing data, including (non-oil domestic exports), we wonder if this is too little too late for the MAS?"

Bank of America Merrill Lynch Global Research wrote last week that the stars suggest "inflation is more pervasive than suggested by headline figures and business costs are rising" in Singapore.

And trade tensions could not fail to weigh on the analysis, as the US rolled out more details of its long-threatened tariffs.

The bank's economics team also wrote: "The gradual pace of tightening is even more appropriate given the rise in trade tensions. While a more serious trade war remains the most important downside risk to the global and domestic economy, we believe that MAS will nevertheless place a heavier weight on baseline expectations for inflation and growth.

"Barring a serious escalation in tensions in the coming weeks, some degree of pre-emptive monetary tightening from the MAS will be appropriate."

The drama in global trade could even have taken its toll on local lenders' loans growth, the pace of which fell to its lowest, year on year, since January last year.

The drop might be due in part to the Chinese New Year festive season falling in February this year, compared with January last year, said OCBC Bank's head of treasury research and strategy, Ms Selena Ling - but, also, "the possible dent in business sentiments after the January stock market slump amid the US-initiated trade tensions".

On the bright side, trade might be the biggest worry for Singapore, with domestic conditions still doing well.

All that international woe aside, today brings key domestic data such as the purchasing managers' index as well as first-quarter private home prices.

ANZ noted in its quarterly economic outlook on March 28: "High frequency indicators validate our view that the underlying growth momentum continues to improve."

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