Today's trading session is set to be a nervy one given the dramatic selloff on Wall Street last Friday.
United States stocks capped their worst week in two years as volatility heightened and jitters ratcheted up over the rise in government bond yields and inflation worries amid the idea that the US Federal Reserve and other central banks might have to raise rates.
The Dow Jones was down 4 per cent on the week. The Standard & Poor's 500-stock index fell 2.1 per cent last Friday, also suffering its worst week in two years, while the tech-heavy Nasdaq fell 1.96 per cent to its lowest level in two weeks. Strong data on jobs and wage growth stoked further fears that the Fed may raise rates more quickly than has been expected. Market watchers attempted to put the bearish trend in perspective, pointing at the heady run-up in equities until this point.
DBS Group Research said in a note: "The view that normalisation of monetary policy will proceed faster than envisaged by the authorities is beginning to take hold. Demand tightness and a rise in inflation will force the hands of FOMC (Federal Open Market Committee), the European Central Bank and the Bank of Japan, goes the narrative.
"We have however been here several times before. At each instance of growth pick-up since the roll-out of QE (quantitative easing) in developed economies a decade ago, calls for policy normalisation have been made by various corners.
"To its credit, the leadership of the US Federal Reserve has made sure that premature tightening was not engineered, and the fragile recovery was not undermined," the research house added.
Mr Jerome Powell will be sworn in as Federal Reserve chair today to succeed Dr Janet Yellen.
Strong data on jobs and wage growth stoked further fears that the Fed may raise rates more quickly than has been expected.
IG Markets Singapore market strategist Jingyi Pan said: "It is also hard to imagine, but close to three weeks have passed for us to ponder over a US government shutdown possibility once again as the Feb 8 deadline looms. A stopgap Bill may very likely come into fruition though we do have some noise around the matter once again - one to follow for impact upon the US dollar."
It is a packed week of central bank meets in Australia, New Zealand and the United Kingdom, although no change in monetary policy is expected.
In Asia, Moody's Analytics expects India's monetary policy committee to become more hawkish in the first meeting for 2018 as inflation has inched higher in recent months and growth has picked up. The Philippines' central bank will also be meeting, with analysts expecting a possible hike.
The focus could move towards Singapore's banking stocks, with DBS Group Holdings being the first of the three banking stalwarts to report its fourth-quarter results on Thursday morning.