Spotlight on geopolitics this week, Latest Business News - The New Paper

Spotlight on geopolitics this week

This article is more than 12 months old

United Nations general assembly starts, major central banking chiefs to speak at various events

Geopolitical tensions look set to dictate sentiment in the week ahead, going by how US markets dived on Friday after news that Chinese officials had suddenly cancelled visits to farms in Montana scheduled for the week.

The mid-level trade talks in Washington were unaffected, but key US indices ended lower on the day. The Dow Jones Industrial Average lost 0.6 per cent to close at 26,935.07 while the S&P 500 gave up 0.5 per cent to 2,992.07. The Nasdaq closed down 0.8 per cent at 8,117.67.

The coming week could be nail-biting with a dearth of trade war news as the next round of meetings between the US and China will not take place until early October, likely after Oct 1, which is China's 70th anniversary.

Still, high-level proceedings at the 74th General Assembly of the United Nations start this week, giving markets something else to think about.

US President Donald Trump and Iranian President Hassan Rouhani have dismissed speculations that they could meet on the sidelines of the assembly.

The US has reiterated statements that it believes Iran to be behind the attacks on Saudi Arabian oil sites last weekend, and on Friday said it would send troops to the Middle East. It also imposed more sanctions on Iran the same day.

Iran has warned that it will retaliate strongly if attacked.

"Be careful, a limited aggression will not remain limited... We are after punishment, and we will continue until the full destruction of any aggressor," the head of Iran's Revolutionary Guards said in remarks broadcast on state TV on Saturday.

On the monetary policy front, numerous central banking chiefs and senior officials from the US Federal Reserve, the European Central Bank, Bank of England and Bank of Japan will be speaking at various events this week. Investors will look out for further insights into the Fed's projected path on interest rates, FXTM market analyst Han Tan said.


"Fed chair Jerome Powell has reiterated that recent easing measures are merely 'mid-cycle adjustments', and the world's most influential central bank is not about to embark on an aggressive campaign of lowering US interest rates," Mr Tan said in an outlook note for the week.

"Still, downside risks continue to swirl around the global economic outlook, and growing headwinds could yet compel the Federal Reserve to lower its benchmark interest rates further."

Central banks due to announce monetary policy decisions this week include the Reserve Bank of New Zealand (RBNZ), Bank of Thailand (BOT) and the Philippine central bank Bangko Sentral ng Pilipinas (BSP). RBNZ and BOT are expected to keep their policy rates unchanged, according to a Bloomberg poll and estimates by UOB Global Economics & Markets Research.

However, United Overseas Bank economist Alvin Liew expects the BSP to cut its overnight borrowing rate by 25 basis points and reserve requirement ratio by 100 basis points.

He attributes the call to recent comments by the BSP governor, who said "the prospects of a rate cut and reserve requirement reduction are bright" and could come sooner than November or December.

The US has a number of data releases this week, including the third print of Q2 gross domestic product and August trade on Thursday.

In Asia, Malaysia will release its Consumer Price Index (CPI) numbers for August on Wednesday. Hong Kong's August trade data is due on Thursday while China's August industrial profits data is expected on Friday.

In Singapore, the August CPI is due today, and August industrial production figures will be released on Thursday.

Japan markets are closed today for Autumnal Equinox Day.

For full listings of SGX prices, go to