Singapore: STI Index (.STI) – Singapore factory activity hit by sharpest fall in more than 5 years amid COVID-19 outbreak

Singapore: STI Index (.STI) – Singapore factory activity hit by sharpest fall in more than 5 years amid COVID-19 outbreak

Singapore’s factory activity contracted sharply in February, amid an ongoing COVID-19 outbreak that has disrupted global supply chains and affected production in the region.

The Singapore Purchasing Managers’ Index (PMI) fell 1.6 points from the previous month to 48.7 in February, the biggest monthly decline since August 2014, according to a survey by the Singapore Institute of Purchasing and Materials Management (SIPMM) published on Tuesday (Mar 3).

February’s reading, which falls below the 50-point level that separates growth from contraction, is also the lowest recorded since February 2016’s reading of 48.5, and reverses two months of expansion for the overall manufacturing sector.

“The latest PMI reading was attributed to first-time contractions for the key indicators of new orders, new exports, factory output, inventory and employment,” said SIPMM.

The indexes of imports, input prices, supplier deliveries, and order backlog recorded first-time contractions, while the finished goods index posted a slower rate of expansion, it added.

The key electronics cluster contracted by 2.5 points in February, the biggest monthly decline since October 2012. This took PMI for the sector in February to 47.6, reversing an expansion in the previous month and making it the lowest reading since December 2012.

MANUFACTURERS “INCREASINGLY CONCERNED”

Factory activity across Asia plunged in February amid a global coronavirus outbreak that has so far killed more than 3,000 people around the world.

China’s factory activity suffered its sharpest contraction on record in February, the Caixin/Markit Manufacturing Purchasing Managers’ Index showed on Monday, following the Chinese government’s PMI release on the weekend which also showed a record pace of decline.

Japan’s PMI showed its factory activity was hit by the sharpest contraction in nearly four years in February, while South Korea’s factory activity also shrank faster as export orders contracted at the quickest pace in more than six years.

“The COVID-19 outbreak that accelerated at the end of January has disrupted global supply chains and impacted the manufacturing sectors,” said Ms Sophia Poh, vice president of industry engagement and development at SIPMM.

“Manufacturers are increasingly concerned about the extent of this disruption, especially when the rate of infections (is) increasing worldwide,” she added.

Last month, Singapore downgraded its GDP forecast for the year amid concerns about the ongoing outbreak. Prime Minister Lee Hsien Loong has also warned that the outbreak will have a significant impact on the local economy for the next couple of quarters.

During his Budget Speech, Finance Minister Heng Swee Keat announced an S$800 million sum to help frontline agencies fighting the disease, as well as a S$4 billion package to help workers and companies weather near-term economic uncertainties.

More than 100 people have contracted the disease in Singapore, with the outbreak prompting the Government to raise the country’s Disease Outbreak Response System Condition (DORSCON) to Orange on Feb 7.

Technical Indicators

Overall, the bias in prices is: Downwards.

Note: this chart shows extraordinary price action to the downside.

By the way, prices are vulnerable to a correction towards 3,163.56.

The projected upper bound is: 3,093.85.

The projected lower bound is: 2,937.18.

The projected closing price is: 3,015.52.

Candlesticks

A black body occurred (because prices closed lower than they opened).
During the past 10 bars, there have been 4 white candles and 6 black candles for a net of 2 black candles. During the past 50 bars, there have been 23 white candles and 24 black candles for a net of 1 black candles.

Momentum Indicators

Momentum is a general term used to describe the speed at which prices move over a given time period. Generally, changes in momentum tend to lead to changes in prices. This expert shows the current values of four popular momentum indicators.

Stochastic Oscillator

One method of interpreting the Stochastic Oscillator is looking for overbought areas (above 80) and oversold areas (below 20). The Stochastic Oscillator is 11.0906. This is an oversold reading. However, a signal is not generated until the Oscillator crosses above 20 The last signal was a sell 10 period(s) ago.

Relative Strength Index (RSI)

The RSI shows overbought (above 70) and oversold (below 30) areas. The current value of the RSI is 28.17. This is where it usually bottoms. The RSI usually forms tops and bottoms before the underlying security. A buy or sell signal is generated when the RSI moves out of an overbought/oversold area. The last signal was a buy 20 period(s) ago.

Commodity Channel Index (CCI)

The CCI shows overbought (above 100) and oversold (below -100) areas. The current value of the CCI is -126.This is an oversold reading. However, a signal isn’t generated until the indicator crosses above -100. The last signal was a sell 11 period(s) ago.

MACD

The Moving Average Convergence/Divergence indicator (MACD) gives signals when it crosses its 9 period signal line. The last signal was a sell 6 period(s) ago.

Rex Takasugi – TD Profile

STRAITS TIMES closed up 11.840 at 3,019.560. Volume was 33% above average (neutral) and Bollinger Bands were 123% wider than normal.

Open     High      Low     Close     Volume___
3,032.3503,042.7703,015.5503,019.560 339,606,304
Technical Outlook 
Short Term: Oversold
Intermediate Term: Bearish
Long Term: Bearish
Moving Averages: 10-period     50-period     200-period
Close: 3,116.14 3,200.54 3,205.33
Volatility: 21 16 13
Volume: 305,716,032 226,969,392 231,994,832

Short-term traders should pay closer attention to buy/sell arrows while intermediate/long-term traders should place greater emphasis on the Bullish or Bearish trend reflected in the lower ribbon.

Summary

STRAITS TIMES is currently 5.8% below its 200-period moving average and is in an downward trend. Volatility is extremely high when compared to the average volatility over the last 10 periods. There is a good possibility that volatility will decrease and prices will stabilize in the near term. Our volume indicators reflect volume flowing into and out of .STI at a relatively equal pace (neutral). Our trend forecasting oscillators are currently bearish on .STI and have had this outlook for the last 25 periods. Our momentum oscillator is currently indicating that .STI is currently in an oversold condition.

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