This information has been prepared by IG, a trading name of IG Markets Limited. In addition to the disclaimer below, the material on this page does not contain a record of our trading prices, or an offer of, or solicitation for, a transaction in any financial instrument. IG accepts no responsibility for any use that may be made of these comments and for any consequences that result. No representation or warranty is given as to the accuracy or completeness of this information. Consequently any person acting on it does so entirely at their own risk. Any research provided does not have regard to the specific investment objectives, financial situation and needs of any specific person who may receive it. It has not been prepared in accordance with legal requirements designed to promote the independence of investment research and as such is considered to be a marketing communication. Although we are not specifically constrained from dealing ahead of our recommendations we do not seek to take advantage of them before they are provided to our clients. See full non-independent research disclaimer and quarterly summary.
With much of the anticipation having been priced in, reactions in equity markets had largely been lukewarm. The same may not be said for the bond market as yields jolted up, sending shockwaves through to yield-sensitive sectors. Regardless, one of the biggest event of the year has finally seen a positive outcome, securing a win for the Trump administration and supporting equity markets through to the New Year.
The week ahead marks the final week for 2017, containing also the Christmas holiday that would see markets across US, Europe and Asia away at the start of the week. A week that contains little from the Western world may find seasonal factors taking the rein, particularly the likelihood of profit-taking as the quarter and the year comes to an end. With the spectacular performance we have seen for global equity markets thus far, the Dow Jones is on its way to end the year with over 20% gains, it would be of little surprise to find the market choosing to lock in the gains as the year closes. Having said the above, one would also find that this seasonal factor sandwiched by contrasting ones, namely the Santa Rally and the January effect, ones to keep in mind as well.
Besides seasonal factors at play, we certainly still do have pockets of data releases next week. From the US, eyes will likely focus on the key consumer confidence release where a moderation has been expected. The market’s median consensus has pointed to the expectation for a slight moderation from the 17-year high in October, though only an upside surprise may jostle the markets.
In line with the US, Asia markets are mostly shut at the start of the week but the rest of the week does bring a slew of key economic indicators. Bank of Japan Governor Haruhiko Kuroda is expected to speak on Tuesday following November’s inflation update and the release of October’s meeting minutes. This week’s Bank of Japan meeting unfolded in line with expectations, reinforcing the support for the current monetary policy stance and investors would be watching the abovementioned items to substantiate the view.
Notably, China’s December official PMI numbers will also arrive after the market closes on Saturday, expected to be the last item to watch before the curtains draw on the year. A slight moderation in the manufacturing gauge has been expected once again and the market reaction would likely ensue in 2018.
For the local Singapore market, the week ahead brings releases including November’s CPI and industrial production, watching a moderation for the latter. The local Straits Times Index has undergone a week of consolidation, sinking slightly past the 50-day moving average towards the week’s close. The next support comes in just ahead of 3350 and should be watched in light of the low participation and year-end profit taking expected next week.