Singapore: STI Index (.STI) Fed’s interest-rate decision remains on top of investors’ mind

Singapore: STI Index (.STI) Fed’s interest-rate decision remains on top of investors’ mind

Singapore: STI Index (.STI) Fed’s interest-rate decision remains on top of investors’ mind

The Fed’s interest-rate decision remains on top of investors’ mind. While the Fed began a two-day policy meeting Tuesday, U.S. president Donald Trump warned the central bank against making “yet another mistake” in a tweet about raising interest rates.

The regional benchmark index rose a mere 0.3 percent as of 5:04 p.m. in Hong Kong, with markets mixed across the region. To boot, trading volume slumped in the last full trading week of the year. And, news that China and the U.S. held vice-ministerial level talks on Wednesday to discuss the ongoing trade dispute didn’t move the needle much.

After the tumultuous Tuesday where major indexes sank, investors stayed on the sidelines while awaiting the conclusion of the Federal Reserve’s rate decision. Here’s a look at how Asian stocks have done so far this month:

The MSCI Asia Pacific Index declined 3.7 percent as of Tuesday, much less than the 7.8 percent plunge in the U.S.

While Asia wiped out $563 billion of value this month, that’s only 16 percent of the market cap lost globally. More than $2.2 trillion evaporated from U.S. stocks.

In terms of valuations, the gap between Asian and U.S. equities has narrowed significantly from a record earlier this year.

Why hasn’t it been as ugly as the U.S. carnage? It could be that the region bore the brunt of a sell-off earlier this year as trade tensions intensified, sending several major markets into correction and bear-market territories way ahead of the turmoil stateside. To Margaret Yang Yan, an analyst at CMC Markets Singapore, the downside for Asian equities is likely to be protected by relatively low valuations, according to a note published Tuesday.

In some sense, though, Asian markets have been calmer. Intraday swings in the MSCI Asia Pacific Index have averaged 0.9 percent this year. While that’s higher than 0.6 percent in 2017, it’s less than in 2016 and less than the mean moves of 1.1 percent for the S&P 500, which is on track to post its biggest swings since 2011. That hasn’t gone unnoticed, and Treasury Secretary Steven Mnuchin blamed stock volatility partly on high-speed trading and the effect of the Volcker Rule during a Bloomberg interview Tuesday.

That said, there’s little to rejoice: The MSCI Asia Pacific Index is heading for its worst December since 2000, and hopes for a Santa rally are fizzling.

The Fed

Looking ahead, the Fed’s interest-rate decision remains on top of investors’ mind. While the Fed began a two-day policy meeting Tuesday, U.S. president Donald Trump warned the central bank against making “yet another mistake” in a tweet about raising interest rates.

JPMorgan Asset Management’s Asia chief market strategist, Tai Hui, will be watching the committee’s median forecasts on the policy rate and whether it will have been impacted by recent market volatility. “Given the cautious market sentiment, a slower pace of rate rises could be interpreted as a sign of weakness and put more pressure on risk assets,” he wrote in a note.

Beyond the Fed, some other news to keep in mind:

The U.S. and China are planning to hold meetings in January to negotiate a broader truce in their trade war but are unlikely to have any face-to-face contact before then, Mnuchin said.

Oil held losses near $46 a barrel after plunging the most in more than three weeks on lingering concerns over a supply glut and trade tensions. Energy shares fell the most among MSCI Asia Pacific Index industry groups.

Shares of SoftBank Group Corp.’s domestic telecom business had one of the worst first-day declines ever in Japan after Masayoshi Son raised 2.65 trillion yen ($23.6 billion) in an initial public offering.

Japan’s export growth slowed again in November, with shipments eking out a tiny gain, as weakening demand in China and trade-war risks cloud the outlook.

Some Southeast Asian markets rallied in the later part of Wednesday: the Philippine Stock Exchange Index lurched higher near the close of market trading on Wednesday, rising almost 2.2 percent as traders grasped for reasons.

Overall, the bias in prices is: Downwards.

The projected upper bound is: 3,152.40.

The projected lower bound is: 2,960.58.

The projected closing price is: 3,056.49.

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 23 white candles and 27 black candles for a net of 4 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 32.7733. This is not an overbought or oversold reading. The last signal was a buy 4 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 45.52. This is not a topping or bottoming area. A buy or sell signal is generated when the RSI moves out of an overbought/oversold area. The last signal was a buy 34 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 -109.This is an oversold reading. However, a signal isn’t generated until the indicator crosses above -100. The last signal was a sell 10 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 13.110 at 3,058.650. Volume was 15% below average (neutral) and Bollinger Bands were 19% narrower than normal.

Open High Low Close Volume___
3,045.9103,065.3703,042.4403,058.650 193,446,400

Technical Outlook
Short Term: Neutral
Intermediate Term: Bearish
Long Term: Bearish

Moving Averages: 10-period 50-period 200-period
Close: 3,086.50 3,070.23 3,286.21
Volatility: 21 20 16
Volume: 196,907,536 231,640,256 237,146,432

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 6.9% 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 0 periods.

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