Absence of optimism in next year's outlook

LAST week was perhaps one of the most forgettable five days in the annals of the local market, with stocks weak almost every day and, apart from a handful of index stocks, volume as poor as it has been at any time this year.

This week holds the promise of some change, although optimists shouldn't get too carried away by expectations that the market will enjoy a drastic turnaround in fortunes. Other than possible month-end window-dressing on Monday that could benefit the Straits Times Index, the main play would be two-fold, namely positive signals from Europe thanks to strong hints from the European Central Bank (ECB) of more monetary stimulus and of course, China.

ECB chief Mario Draghi has said the central bank will "do what it takes" to rapidly reach its inflation goal and has dropped many hints of more loosening in the days ahead. Financial research firm Ideaglobal thinks this means an "outsized cut in rates" this week, with deposit rates falling as low as minus 50 basis points.