Plenty of policy decisions, earnings to mull over

It will be a busy week ahead for central banks around the world, with a slew of figures and policy decisions expected to be announced.

Data such as China's January trade figures and Japanese fourth-quarter economic growth might provide some cues to the market which has been roiled by heavy selling over the past week.

Indeed, traders worldwide have been dumping equities in favour of safe-haven assets since the beginning of the year, amid mounting concerns over global economic growth and the extended decline in oil prices.

But this week, the United States Federal Reserve will likely take centre stage, as it is set to release the minutes from its January policy meeting on Thursday night Singapore time, which may hold some clues as to whether central bankers will go ahead with the interest rate hikes.

Still, this "may not necessarily provide more clarity" as the minutes may not reveal much, said IG market strategist Bernard Aw.

Another major event that could have a global impact is the European Parliament's economic committee meeting today, at which European Central Bank (ECB) chief Mario Draghi is scheduled to speak.

"After the (Swedish central bank) Riksbank cut deposit rates more aggressively than expected, the moves have been taken as a precursor to more action from the ECB at its March 10 policy meeting. Draghi's remarks will be closely watched," said Mr Aw.

The Swedish government last week cut interest rates by 15 basis points, moving them deeper into negative territory.

Closer to home, there is also plenty that could move investor sentiment. Japan reports its fourth-quarter economic figures today while China will release its trade figures for last month.

Singapore is set to report its December retail sales figures and exports performance this week, alongside the final estimate of the fourth-quarter gross domestic product figures.

Last week saw hard-handed selling across markets in the region, particularly in Japan, which slumped 12 per cent to suffer its worst week since the global financial crisis in 2008.

In the US, Wall Street halted a five-day slide on Friday with a sturdy 2 per cent jump ahead of a long weekend - it is closed today for President's Day - as oil prices rebounded to around levels of US$33 a barrel.

"Most of the people out there feel like the downdraft isn't a big crash in the making, so everyone is looking for a time to buy," Phillip Titzer, who helps oversee about US$1.4 billion (S$2 billion) as vice-president of investment operations at Edgar Lomax in the US, told Bloomberg.

"This might just be some investing of some cash with people thinking prices look good now. There isn't any huge development but oil is up and so many times we see oil go up and stocks go up."

At home, the Straits Times Index capped a shortened week with a gain of 1.67 points or 0.07 per cent to 2,539.95 on Friday. But it was still down 83.26 points or 3.2 per cent for the week.

Remisier Desmond Leong told The Straits Times that China, which resumes trading after a week-long holiday today, will be in the spotlight as it plays catch-up with a whole week's worth of news and market movement.

"The Chinese markets haven't been able to react to even the Dow's drop (on Feb 5) and the Nikkei," he said, noting that they will likely get off to a weak start.

But Singapore equities could be shielded from some of that weakness, added Mr Leong. "We may not necessarily take the lead from China because all of these (events) have already been factored in and it doesn't make sense for us to factor them in again. I don't think it will be that bad for us."

But he expects volatility to continue, given the unpredictability of the US market.

Traders will be watching corporate earnings closely as well, as results season goes into full swing. Sembcorp Marine is due to announce its full-year results today, followed by parent company Sembcorp Industries on Wednesday.

tsjwoo@sph.com.sg

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