Singapore: STI Index (.STI) – Singapore manufacturing shrinks in February at fastest pace since 2014 on coronavirus outbreak

Singapore: STI Index (.STI) – Singapore manufacturing shrinks in February at fastest pace since 2014 on coronavirus outbreak

Manufacturing shrank in February at the fastest pace in more than five years, reflecting the disruption caused by the coronavirus outbreak.

The decline was led by the electronics sector, which had expanded in January for the first time after languishing in contraction territory for 14 straight months.

The Singapore Purchasing Managers’ Index (PMI) fell 1.6 points in February, the biggest drop in a month since August 2014, according to data from the Singapore Institute of Purchasing and Materials Management (SIPMM).

The first contraction in three months pulled the PMI down to 48.7, the lowest level since February 2016. A reading over 50 indicates expansion, while a reading below points to contraction.

The electronics PMI fell 2.5 points from the previous month to 47.6, the lowest since December 2012. The decline was also the biggest in a month since October 2012.

This is the first set of data to show the true extent of the hit the economy might take from the outbreak.

The Government last month downgraded its GDP growth forecast, raising the possibility of the first full-year recession in about two decades.

The dip in Singapore’s manufacturing activity follows reports from around the world this week showing factories taking a beating from the outbreak.

Activity in China shrank at a record pace. US manufacturing activity also slowed in February as new orders contracted. Japan’s factory activity was hit by the sharpest contraction in nearly four years.

Key economies in the global technology supply chain also suffered.

Manufacturing in South Korea shrank at a faster pace, while in Vietnam and Taiwan, activity slipped into contraction.

Key components of the Singapore PMI – new orders, new exports, factory output, inventory and employment – all declined, reversing the gains in the final months of 2019.

Imports, input prices, supplier deliveries and order backlog also snapped out of the recovery mode. The finished goods index posted a slower rate of expansion.

Beyond disrupting factory supply chains and undercutting exports, the outbreak that is now spreading fast across the Western Hemisphere has also led to a global slowdown in travel that may hamper the service industry.

United States financial markets led a global rout last week amid fears that the coronavirus outbreak may derail the longest US economic expansion on record, now in its 11th year.

“Manufacturers are increasingly concerned about the extent of this disruption, especially when the rate of infections are increasing worldwide,” Ms Poh said.

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 3,155.86.

The projected upper bound is: 3,099.52.

The projected lower bound is: 2,942.68.

The projected closing price is: 3,021.10.

Candlesticks

A white body occurred (because prices closed higher 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 24 white candles and 24 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 19.5784. This is an oversold reading. However, a signal is not generated until the Oscillator crosses above 20 The last signal was a sell 11 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 29.45. 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 21 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 -108.This is an oversold reading. However, a signal isn’t generated until the indicator crosses above -100. The last signal was a sell 12 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 7 period(s) ago.

Rex Takasugi – TD Profile

STRAITS TIMES closed up 5.470 at 3,025.030. Volume was 45% above average (neutral) and Bollinger Bands were 137% wider than normal.

Open     High      Low     Close     Volume___
3,015.2003,031.9303,003.0903,025.030 373,878,688
Technical Outlook 
Short Term: Oversold
Intermediate Term: Bearish
Long Term: Bearish
Moving Averages: 10-period     50-period     200-period
Close: 3,097.28 3,196.61 3,204.60
Volatility: 20 16 13
Volume: 322,695,136 234,446,960 233,240,688

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 5.6% below its 200-period moving average and is in an downward trend. Volatility is high as compared to the average volatility over the last 10 periods. 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 26 periods. Our momentum oscillator is currently indicating that .STI is currently in an oversold condition.

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