Singapore: STI Index (.STI) higher after the US Federal Reserve cut interest rates as expected to keep economic expansion on track

Singapore: STI Index (.STI) higher after the US Federal Reserve cut interest rates as expected to keep economic expansion on track

Singapore: STI Index (.STI) higher after the US Federal Reserve cut interest rates as expected to keep economic expansion on track

Asian shares rose on Thursday (Oct 31) and US stock futures edged higher after the US Federal Reserve cut interest rates as expected to keep economic expansion on track.

MSCI’s broadest index of Asia-Pacific shares outside Japan was up 0.2 per cent. Japan’s Nikkei stock index rose 0.41 per cent, but Australian shares fell 0.24 per cent.

In Singapore, the Straits Times Index gained 10.55 points or 0.33 per cent to 3,218.47 as at 9.04am. Gainers outnumbered losers 80 to 44 after 54.4 million shares worth about $153.5 million changed hands.

US Treasury yields extended declines in Asia after the rate cut, but further declines may be limited as Fed Chairman Jerome Powell signalled additional rate cuts are unlikely because there are several areas of strength in the US economy.

The yen held steady versus the dollar before a Bank of Japan policy meeting later on Thursday. The BOJ is expected to keep its ultra-easy monetary policy in place, but the decision could be a close call.

Debate at the Fed and the BOJ highlights the struggle that many central banks are facing.

The US-China trade war and Britain’s divorce from the European Union have increased uncertainty, but central banks are somewhat reluctant to ease policy aggressively because interest rates are already very low in many major economies.

“The biggest thing that stands out is stocks look stronger after the Fed,” said Tsutomu Soma, general manager of fixed income business solutions at SBI Securities in Tokyo.

“Risks like US-China or Brexit haven’t been resolved completely, but the markets are starting to look beyond these risks. The BOJ is likely on hold, so it will be difficult for currencies to react.”

US stock futures nudged 0.07 per cent higher on Thursday in Asia after the S&P 500 rose 0.33 per cent to close at a record high on Wednesday for the second time in three trading sessions.

The Fed lowered its policy rate to 1.50 per cent-1.75 per cent, but dropped a previous reference in its statement to “act as appropriate” to sustain the economic expansion.

In his news conference, Powell listed several reasons why he feels the economy is doing well, such as robust consumer spending, strengthening home sales, and healthy asset prices.

The yield on benchmark 10-year Treasury notes fell to 1.7838 per cent in Asia on Thursday, while the two-year yield eased slightly to 1.6076 per cent.

The dollar index against a basket of six major currencies fell 0.22 per cent to 97.427, extending declines from Wednesday.

The yen was little changed at 108.80 per dollar as traders awaited the outcome of the BOJ meeting.

Japan’s central bank may trim its consumer price forecasts but leave policy unchanged due to hopes that progress in scaling back a US-China trade dispute will give it room to save its dwindling policy tools.

Optimism that Washington and Beijing will sign a preliminary agreement to call a truce to their 16-month trade war was also a factor behind the Fed’s decision to signal that further rate cuts are on hold, highlighting the importance of trade talks to global monetary policy.

In the energy market, oil futures extended declines on Thursday as a massive buildup in US crude stock piles reinforced concerns about oversupply in the world’s energy markets.

US crude fell 0.29 per cent to US$54.90 per barrel.

Crude inventories, excluding the Strategic Petroleum Reserve SPR, rose 5.7 million barrels in the week to Oct. 25, the Energy Information Administration said on Wednesday.

This blew past analysts’ expectations for a 494,000-barrel build.

Technical Indicators

Overall, the bias in prices is: Upwards.

The projected upper bound is: 3,290.60.

The projected lower bound is: 3,173.25.

The projected closing price is: 3,231.92.

Candlesticks

A white body occurred (because prices closed higher than they opened).
During the past 10 bars, there have been 6 white candles and 3 black candles for a net of 3 white candles. During the past 50 bars, there have been 22 white candles and 27 black candles for a net of 5 black candles.

A rising window occurred (where the top of the previous shadow is below the bottom of the current shadow). This usually implies a continuation of a bullish trend. There have been 7 rising windows in the last 50 candles–this makes the current rising window even more bullish.

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 76.1188. This is not an overbought or oversold reading. The last signal was a sell 1 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 68.96. 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 44 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 145.This is an overbought reading. However, a signal isn’t generated until the indicator crosses below 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 buy 13 period(s) ago.

Rex Takasugi – TD Profile

STRAITS TIMES closed up 21.960 at 3,229.880. Volume was 41% above average (neutral) and Bollinger Bands were 8% narrower than normal.

Open     High      Low     Close     Volume___
3,217.6003,235.2403,213.4603,229.880 302,617,376
Technical Outlook 
Short Term: Overbought
Intermediate Term: Bullish
Long Term: Bullish
Moving Averages: 10-period     50-period     200-period
Close: 3,173.30 3,136.38 3,224.93
Volatility: 9 12 12
Volume: 199,121,232 204,123,632 212,063,376

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 gapped up today (bullish) on normal volume. Possibility of a Runaway Gap which usually signifies a continuation of the trend. Four types of price gaps exist – Common, Breakaway, Runaway, and Exhaustion. Gaps acts as support/resistance.
STRAITS TIMES is currently 0.2% above its 200-period moving average and is in an upward trend. Volatility is extremely low when compared to the average volatility over the last 10 periods. There is a good possibility that there will be an increase in volatility along with sharp price fluctuations in the near future. Our volume indicators reflect moderate flows of volume into .STI (mildly bullish). Our trend forecasting oscillators are currently bullish on .STI and have had this outlook for the last 3 periods.

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