Sep 05, 2016

    Stocks may get a lift as Fed rate hike risk fades

    A MISS in the tightly-watched jobs data report in the United States has softened expectations for a rate hike this month, which could spell a spot of relief for traders this week.

    Wall Street advanced last Friday as non-farm payroll data showed the number of jobs added last month was fewer than expected, while still indicating that the labour market is growing steadily.

    The Dow Jones Industrial Average rose 0.36 per cent while the S&P 500 put on 0.42 per cent. The US markets are closed today for a holiday.

    "That the US stock markets rose is an indication the non-farm payroll numbers, while underwhelming, is not weak enough to be concerning," said IG market strategist Bernard Aw. "What it does seem to show is that the likelihood of a September Fed hike is dramatically lowered.

    "Investors believed that this will support equities."

    Mr Aw added that Asian markets, including Singapore, could ride on the upwave from US and European stocks this week, "although we are unlikely to see a strong bullish response".

    Traders will be on the lookout for a slew of central bank activity this week, set to follow the G20 summit in China, which ends today.

    Bank of England governor Mark Carney is slated to give a testimony before British parliament on Wednesday, during which details about the central bank's measures following the Brexit vote may emerge.

    US Federal Reserve officials John Williams and Eric Rosengren will be speaking tomorrow and Friday respectively. The Beige Book, a report on the economic conditions of US' districts, will be published mid-week - which could offer more clues to the timing of the next rate hike.

    A number of economic reports will also help provide direction for markets.

    Australia is set to release second quarter gross domestic product figures on Wednesday while Japan will announce its numbers the day after. China is also reporting its August trade figures, inflation numbers and foreign direct investment data from Thursday.