Data galore for markets to mull over

NEXT BIG THING? Economists now see the first Fed rate hike coming next month, if this month's US jobs report is strong. PHOTO: AGENCE FRANCE-PRESSE


    Aug 31, 2015

    Data galore for markets to mull over

    AS RELATIVE calm settles in after last week's roller-coaster gyrations in global equities and currencies, markets this week are likely to be mulling over United States interest rates.

    They will be weighing the likely timing of a US rate lift-off after Federal Reserve vice-chairman Stanley Fischer left the door open for the first rises to come next month.

    In a speech at an annual economic conference on Saturday, Mr Fischer said there is "good reason to believe that inflation will move higher as the forces holding down inflation dissipate further".

    The effects of a stronger US dollar and plunging oil prices - key factors in holding down inflation - have already started to diminish.

    Rising oil prices are likely to keep boosting local offshore marine, and oil and gas counters, which already started to rebound last week.

    Keppel Corp jumped 8.5 per cent to $7.04 on Friday from its 12-month-low of $6.49 on Black Monday, while Ezra soared 24 per cent to 12.2 cents from its 12-month-low of 9.8 cents on Monday.

    Investors have been trying to determine if the Fed might still be on course to raise rates after its Sept 16 to 17 meeting, given the recent turbulence in financial markets and concerns over China's slowing growth.

    More volatility is expected towards Friday, when US non-farm payrolls data is released.

    Economists now see the first rate hike coming next month if this month's US jobs report is strong and global financial markets continue to settle down.

    The US second-quarter growth improvement was driven by more robust personal consumer spending and higher government spending.

    The biggest lift came from gross private domestic investment, which posted growth of 5.2 per cent owing to higher construction spending, spending on intellectual property products and a build-up of inventories, according to UOB Global Economics & Markets Research.

    Investors are also watching for China's official manufacturing Purchasing Managers index (PMI) data tomorrow, and Singapore's PMI and Electronics Sector Index data on Wednesday.

    IG market strategist Bernard Aw noted that after the substantial upward revision in second-quarter US gross domestic product, "every major US data point would be important to the data-dependent FOMC (Federal Open Market Committee), in the run-up to the September meeting".

    Looking ahead, investors are watching for US manufacturing PMI, construction spending, job figures and trade balance.

    The European Central Bank will have its monetary policy meeting on Thursday, while the Group of 20 finance ministers and central bank governors will meet on Friday to discuss global economic affairs.