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Asia week ahead - FOMC minutes, Singapore budget

Global equity markets mostly treaded water in the week, awaiting conclusions from US-China trade talks. For the week ahead, besides digesting the progress, or the lack of, items such as the FOMC minutes will be the ones to watch.

US-China trade talks

Risk-on atmosphere brewed into the week on the back of trade hopes as President Donald Trump’s comments fuelled expectations for an extension to the March 1 deadline. While we have yet to receive official updates following news of talks having been concluded, early reports citing the lack of progress so far in Beijing had taken a bite on Asia markets as prices edged lower into late Friday. The situation on hand remains little changed for regional indices across the week, but the same may not be said if any surprise does turn up with the announcement of the conclusions and next steps. This will be one to watch over the weekend and into next Monday’s open for Asia markets, likely holding the key here to prices escaping the consolidation over various asset classes.

FOMC minutes details

The highlight amongst next week’s releases will be the January Federal Open Market Committee (FOMC) meeting minutes. Following the dovish turn by the Federal Reserve in December, January saw the Fed delivering further boosters with suggestions on the tapering of their balance sheet run-off. This saw a whole additional segment illustrating their thoughts in the meeting statement that could use further clarifications with the minutes due in the coming week. As far as the market is suggesting, the Fed’s patient stance is expected to retain in the first half of 2019 but a halt to the balance sheet run-off as early as this year could help to support equity markets, one to watch for more details.

Other indicators expected from the US through the week includes the likes of durable goods and existing home sales while the Markit PMI out of both the US and the eurozone will again shed light on the relative performance of the two regions for EUR/USD reactions. Do note that US markets will be away on Monday for a market holiday.

Asia indicators

Asia markets remain watching US-China trade updates intently, the overshadowing item at present and one pertinent towards the growth outlook for the region. Besides the potential for updates to guide markets at the start of the week, look to pockets of releases across the region during Asia hours. This includes the likes of Japan’s January inflation reading, with a consensus estimate at 0.8% year-on-year for core CPI, up from 0.7% previously. This would, however, likely effect little for the Bank of Japan (BoJ)’s policy with the BoJ following suit the likes of the Fed in holding this wait-and-see stance. Australia’s wage inflation and employment will also be key data for the Aussies.

For the local Singapore market, it looks to be a busy week with the Budget 2019 announcement due on Monday. In light of the closing in on the next general elections, an expansionary budget is expected this round. The materialization of which may potentially be supportive for the local market. Singapore’s January non-oil domestic exports and the first of bank earnings, DBS Group Holdings will also be seen before the market open on Monday.

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