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The Week Ahead: Oil Slick Ahead

The Organisation of Petroleum Exporting Countries meets next week in Vienna to talk about production cuts, again. OPEC has said that it will do whatever is necessary to balance the oil market. It is widely expected that the cartel and its allies will extend the current cuts for at least another six months. That could be good news for Keppel Corporation (SGX: BN4) and Sembcorp Marines (SGX: S51).

US new home sales are now a closely watched measure of consumer sentiment. When consumers feel more confident about the US economy, they are more likely to fork out for big ticket items such as houses. Last month, the sales of single-family houses jumped 5.8% to 621,000.

Japan pleased the market this week with robust economic growth numbers that were in line with expectations. The growth was primarily driven by healthy exports. At the start of next week, Japan will report balance of trade for April, which could set the tone for the next crop of GDP figures.

The world’s third-largest economy will also report its latest inflation numbers, which have been anaemic. In March, Japan’s consumer prices rose 0.2% year on year, compared to February. A lack of inflationary pressures could scupper the Bank of Japan’s plan to drive economic growth through higher consumer demand.

The central bank of Thailand has an interest-rate decision to make. In March it left the cost of borrowing unchanged at 1.5%. With inflation forecast to be around 1.2%, the Bank of Thailand is expected to keep its benchmark interest rate unchanged again.

The central bank of South Korea is also expected to keep interest rates unchanged at 1.25%. It hasn’t changed for nine straight meetings. The bank believes that demand-led inflation is not expected to be high, given the moderate pace of domestic growth.

And finally Singapore has an important economic number to report. The year-on-year headline inflation numbers on Tuesday is expected to increase to 0.8%. The rise last time was driven by food and transport. Core inflation is expected to creep up to 1.4%, which is worrying.

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