The week ahead

The week ahead: What's next after the year's opening volatility?
Singapore's STI was bumped up towards Fri’s close, ending 21 points higher at 2,751. But the reverse pattern panned out in the US, with markets giving up early gains to close in the red after an upbeat job report failed to ease worries of a China-led slowdown in the global economy.

A devaluation in the yuan and trading halt in Chinese markets had spooked investors last week, sending a ripple effect across the globe with a risk-off mentality taking root.

This week could see some respite as figures from the festive period start to trickle in with retailers being the main focus.

Singapore:
1. Retail sales for Nov (est: 3.4%, prior: 2.7%)
Retail sales in Singapore rose 2.7% in Oct, pumped up by motor vehicles sales (+61.8%). Without this boost, retail sales would have dropped 4.6%. Notable dampeners were IT products (-19.4%), petrol stations (-16.7%), and recreational goods (-12.4%).

However, with the holiday season likely to crimp motor vehicle sales, as manifested by the slump in COE prices, the overall figure could potentially see some compression in Dec.

China:
1. New Rmb loans (est: Rmb700b, prior: Rmb708.9b)
2. Trade balance (est: US$52.15b, prior: US$54.1b)
According to latest data, China banks extended Rmb11.1t in new loans for the first 11 months of 2015, topping 2014’s full year lending. Borrowing has been driven by bank loans to troubled firms that needed refinancing as well as mortgage and transport infrastructure.

Chinese banks are sometimes compelled by local governments to lend to highly indebted companies in order to maintain social stability.

US:
1. Monthly budget statement for Dec (est: -US$7.1b, prior: US$1.9b)
2. Initial claims (est: 275k, prior: 277k)
3. Retail sales (est: -0.1%, prior: 0.2%)
4. Industrial production (est: -0.2%, prior: -0.6%)

Fresh clues on the Fed’s view of the US economy might come from a slew of speeches from Fed officials during the week, with the central bank expected to release its Beige Book economic report. Meanwhile, US President Barack Obama is also set to deliver his final State of the Union address.

Alcoa, is scheduled to unofficially kick off the 4Q results season with earnings forecast to drop by 4.2%, a sharper fall from expectations of a 3.7% decline a week ago.