Focus on Powell speech, trade war

With the earnings season for the April-June period largely over, investors in Asia have their attention firmly set on US-China trade matters and the state of affairs in Hong Kong.

Global equity markets faced weeks of sell-offs after US President Donald Trump indicated a move to implement tariffs on the remaining Chinese imports.

Emerging market currencies have also taken a hit due to the growing uncertainty over the trade relationship between the two superpowers and worsening macroeconomic conditions. This has resulted in investors shifting funds into safe-haven assets like gold, the yen and more defensive stocks.

Although Mr Trump has delayed tariffs on some of the imports - those most likely to affect the US consumer - to December, China has threatened retaliation.

Market attention will also be on the US Federal Reserve chair Jerome Powell's speech on Friday at the annual Jackson Hole Symposium.

"In the past, the Jackson Hole Symposium has occasionally been used as a platform to signal major Fed policy changes and markets will eagerly look forward to Powell's insights on how aggressive the Fed intends to be in its upcoming September FOMC (Federal Open Market Committee)," United Overseas Bank economist Alvin Liew said.

Last Friday, Singapore's Straits Times Index (STI) continued to trend downward, though it swung back from a 1 per cent opening loss to close at 3,115.03, down 11.06 points or 0.4 per cent.

The past week saw the benchmark index lose 53.91 points or 1.7 per cent from the prior week's close of 3,168.94.

The STI has lost 5.6 per cent in the first half of August, and is trading around 9 per cent lower than its April peak.

Head of OCBC Investment Research Carmen Lee noted the index is now trading below its five-year and 10-year averages while traders have said there are opportunities to pick up some attractively valued counters.

The Singapore economic docket remains mostly empty for the week, with just July's consumer price index data to be released on Friday. ING's economists think the figures are likely to show a further dip in headline inflation to 0.5 per cent from 0.6 per cent in June.

The drop, its economists said, is likely from "the lower housing component due to the quarterly rebate of services and conservancy charges for public housing more than offset a 6.4 per cent hike in electricity tariffs for the current quarter".

The bank expects core inflation, which strips out accommodation and private road transport costs, to slow to 1 per cent from June's 1.2 per cent, raising odds of easing by the central bank.

"Just as the government this week cut its growth outlook for the year to 0 per cent to 1 per cent, the Monetary Authority of Singapore dashed hopes of an off-cycle easing. Probably, something big is in the pipeline in the October semi-annual statement," ING said.

With most Chinese economic data for July already released, a light data week awaits the rest of the region.

Among the key highlights are Thailand's second-quarter gross domestic product (GDP) today, South Korea's trade data for the first 20 days of August on Wednesday and July industrial production figures from Taiwan on Friday.

On Thailand's GDP for Q2, Mr Liew noted the bank expects the country's real GDP to pick up pace to 3.3 per cent year-on-year from 2.8 per cent in the first quarter and ahead of a Bloomberg consensus poll estimate of 2.3 per cent.

Among Asia-Pacific central banks, only Indonesia's has a monetary policy decision this week, on Thursday.

According to a Bloomberg poll, five of the six economists polled expect Bank Indonesia to keep its policy rate unchanged while the other expects a 25 basis point cut to 5.5 per cent.

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