Aug 15, 2016

    Investors seek direction from Fed meeting

    INVESTORS may be busy in the week ahead with a number of key economic data slated

    to be released, said market analysts.

    One key event will be the United States Federal Reserve's minutes of the July Federal

    Open Market Committee (FOMC) meeting,

    to be released early Thursday morning.

    Any hint of an interest rate hike will be noticed, especially since the Fed recently noted that near-term risks - particularly those related to the fallout from Britain's vote to leave the European Union - have diminished.

    "What investors will look out for is language reinforcing the view that the FOMC is predisposed towards a rate hike if economic data outperform in the months ahead," said IG market strategist Bernard Aw. "In that regard, US consumer prices and housing data will be watched closely."

    He noted that the latest non-farm payrolls,

    which came in stronger than expected, have

    raised expectations over more rate hikes to come.

    Closer to home, Japan is set to announce

    its second-quarter gross domestic product (GDP) figures today, which is expected to show

    further signs of a slowdown.

    Singapore is also releasing data for June retail sales today and numbers for July non-oil

    domestic exports on Wednesday.

    The Government last week narrowed its growth forecast for the year in view of the weaker global outlook and concerns over Brexit.

    Over the past few weeks, attention on the local front was largely focused on corporate earnings.

    DBS Group Holdings, the last of Singapore's banks to announce results, posted a 6 per cent drop in Q2 earnings to $1.05 billion last Monday.

    Singapore's economy is now expected to grow

    by 1 to 2 per cent, from 1 to 3 per cent.

    The Straits Times Index (STI) slipped 2.42 points, or 0.08 per cent, to 2,867.4 in a quiet session

    last Friday. But it was still 39.23 points or

    1.39 per cent up for the shortened week,

    lifted in part by a strong showing in Wall Street.

    All three major US stock indexes - Dow Jones Industrial Average, S&P 500 and Nasdaq Composite Index - hit record highs on Thursday.

    "It's gotten to a level which I would call overvalued... and maybe I can't call it a bubble yet but we're pretty close in my view," Hugh Johnson, chief investment officer of Hugh Johnson Advisors in Albany, New York, told Bloomberg.