US earnings, Chinese data in focus this week
AFTER stumbling on a severe selloff led by the US at the end of last week, markets will be watching the start of the earnings season, the Federal Open Market Committee's (FOMC) September meeting minutes and a slew of Chinese data in the week ahead.
Most global markets regained their footing after one day of bloodshed, but the US equity markets took an extra day to recover. On Friday, the Dow Jones Industrial Average advanced 1.15 per cent to 25,339.99, while the S&P 500 picked up 1.42 per cent to 2,767.13. The Nasdaq Composite rose 2.29 per cent to 7,496.89.
However, gains were capped by continued worries over trade tensions and rising interest rates; all three indices experienced their largest weekly percentage declines since March 23.
In a note on Friday, JPMorgan Chase & Co's Marko Kolanovic said forced selling by computer-driven trading strategies likely aggravated the selloff, and the worst of the rout should be past, now that such systematic selling has run its course.
But Janna Sampson, co-chief investment officer at OakBrook Investments LLC in Lisle, Illinois, told Reuters that the recovery could remain vulnerable as long as the US-China trade dispute is unresolved.
"If earnings come out good, I think this rally is sustainable if we don't get negative trade news," she said.
US events in the week ahead include the FOMC's September meeting minutes to be released on Thursday and the quarterly reporting season kicking off in earnest. Investors will be watching for the impact of the heightened US-China trade tensions on company results.
The US Treasury is also expected to release its semi-annual report on foreign exchange rate practices soon, with UOB Global Economics & Markets Research noting that the October report was typically released between Oct 14 and 19 in the past five years.
"This report takes top spot following US Treasury Secretary Steven Mnuchin's comments that the US Treasury is monitoring currency issues very carefully and that he wants to discuss the currency issues with China as part of trade talks and make sure China is not engaging in competitive devaluation," UOB said.
European Union leaders will meet on Thursday and Friday to discuss migration and internal security, as well as the state of Brexit negotiations. The Italian government's plans to increase borrowing over the next three years may also surface in talks - Reuters reported that European participants found themselves fielding numerous questions on the issue in their conversations with other officials at the International Monetary Fund's meeting over the weekend.
Key data from China will include its September producer price index and consumer price index, both due out on Tuesday. The stream of Chinese data this week will also see the release of retail sales, industrial production and Q3 gross domestic product (GDP) numbers on Friday. Bloomberg consensus is 6.6 per cent year-on-year for Q3 GDP growth, down from 6.7 per cent in the previous quarter.
In other Asian markets, the Reserve Bank of Australia will release its October meeting minutes on Tuesday, while South Korea's central bank is expected to keep its policy rate unchanged at 1.5 per cent when it announces its latest decision on Thursday.
Indonesia and India release their respective September trade data today, and Australia puts out its September employment report on Thursday. A few markets will close for holidays this week - namely Thailand today, Hong Kong on Wednesday, and India on Thursday.
At home, look out for the September non-oil domestic exports (NODX) growth on Wednesday, which UOB said may slow to 3.8 per cent year-on-year, from 5 per cent in August.
For full listings of SGX prices, go to http://btd.sg/BTmkts
