Trump and data to guide market's course
The "Trump off, Trump on" trading climate will continue to rule equities this week as traders keep their ears to the ground for something "phenomenal" to steamroll through the markets.
US President Donald Trump's market-thrilling hint last week that a "phenomenal" tax plan was imminent was enough to set off predictions by stock pundits that a "Trump rally" could just be starting, even though the reform promise is, according to him, two to three weeks away.
The exhilaration in US equities overnight on Friday could lend credence to such optimism and could further underpin the local bourse's decent ascent.
All three major US indices capped last week at record highs; the Dow Jones Index surged 0.5 per cent on Friday while the S&P 500 gained 0.4 per cent and the Nasdaq Composite rose 0.3 per cent.
Other than that, a busy economic docket out of US and key Asian economies this week could also guide the market's direction.
US Federal Reserve chair Janet Yellen will testify before Congress on Tuesday and Wednesday, and deliver the semi-annual Monetary Policy Report.
This would also be her first appearance since January's jobs report, hence the market will be on the lookout if she repeats her hawkish comments on "a few hikes" this year.
While weak wage growth has doused the fire on the DXY (US Dollar Index) bulls, strong job additions and a rise in inflation could still warrant another step towards policy normalisation, notes Maybank Research.
More validation of that expectation could come from a slew of data to be released this week in the world's largest economy including manufacturing and inflation numbers.
A string of gross domestic product (GDP) updates is also expected out of Asia including Singapore. The week begins with Japan releasing its fourth quarter 2016 preliminary growth data today which, based on estimates, could signal a slowdown from the previous quarter.
China will release trade, inflation and monetary data over the week, which will be scrutinised as they serve as a gauge on the health of the world's second largest economy.
Moody's Analytics expects China's January data barrage to paint an upbeat picture of the economy, although it admits that economic data in the first two months of the calendar year are "notoriously difficult to read" in China due to the timing of the Chinese New Year.
Malaysia will also release their Q4 GDP data, while Taiwan is expected to release final growth figures too.
Singapore's January non-oil domestic exports (NODX) will be released on Friday and analysts are expecting some moderation after two months of exceptional growth.
It is hard to tell if the Straits Times Index (STI) can stay fired up this week after whipping up gains of 59 points or 1.9 per cent last week to scale a 17-month high of 3,100.39. Trading volume stayed above 3 billion shares every day last week.
Do not be surprised if caution sets in this week given the overbought levels of some stocks.
Market moving news could also come from STI heavyweights - the three big local banks are scheduled to issue their earnings report card this week.
The privatisation theme could also stir further activity; last week saw takeover offers for Auric Pacific Group and precision engineering firm Spindex Industries.
Traders may be on the look out for other potential targets.
According to KGI Securities, for the 20 companies including SMRT, Osim International and HTL International that were bought out last year, the one-year median return was 23 per cent before trading was halted.
This article appears in The Business Times today. For full listings of SGX prices, go to btd.sg/BTmkt