Singapore: STI Index (.STI) markets rise after Fed says it won’t raise interest rates
Asia markets cheered on Thursday, as a dovish United States (US) Federal Reserve signalled it would slow down its pace of interest rate hikes, putting an ease on concerns to the rising cost of borrowing. This is even though weak economic data results from China posted yet another monthly slump in manufacturing performance.
Dealers are also watching out for developments on the closed-door trade talks between China and the US, to see if any positive developments could pan out from there.
By mid-afternoon in Singapore, Singapore’s Straits Times Index rose 0.42% or 13.30 points, at 3,187.68, while FTSE Bursa Malaysia Kuala Lumpur Composite Index gained 0.47% or 7.99 points, at 1,692.10.
Chinese indices also saw positive trading with the Hang Seng Index higher by 1.09% or 300.53 points, at 27,943.38, while the Shanghai Composite Index was 9.00 points or 0.35% higher, at 2,584.57.
Tokyo’s Nikkei 225 index gained 1.06% or 216.95 points, to close Thursday’s trading at 20,773.49 points, while the broader Topix Index was higher by 1.08% or 16.73 points, at 1,567.49 points.
Fed interest rates unchanged
The Fed on Wednesday held interest rates steady as expected, but it also removed its notion of ‘further gradual increases’ for its interest rates, adding that it would be ‘patient’ before making any further moves as the country works through global growth risks and trade issues with other countries.
‘The case for raising rates has weakened somewhat,’ the Fed’s chair, Jerome Powell said.
The greenback struggled near a three-week trough against its major peers as investors reacted to the Fed’s changed tone.
China’s manufacturing activity contracts for the second month
The weaker Chinese data could have been a dampening contributor to the positive but muted trading on Thursday.
China’s manufacturing sector continued to contract for the second consecutive month in January as the country remains embroiled in a scathing trade war with the US.
The official manufacturing purchasing managers’ index (PMI) was at a score of 49.5 points, higher than the 49.4 points in December. The performance was however, better than economists’ expectations.
Overall, the bias in prices is: Upwards.
By the way, prices are vulnerable to a correction towards 3,148.77.
The projected upper bound is: 3,274.30.
The projected lower bound is: 3,112.10.
The projected closing price is: 3,193.20.
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 26 white candles and 23 black candles for a net of 3 white candles.
A spinning top occurred (a spinning top is a candle with a small real body). Spinning tops identify a session in which there is little price action (as defined by the difference between the open and the close). During a rally or near new highs, a spinning top can be a sign that prices are losing momentum and the bulls may be in trouble.
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.
One method of interpreting the Stochastic Oscillator is looking for overbought areas (above 80) and oversold areas (below 20). The Stochastic Oscillator is 40.8180. 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 56.22. 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 64 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 -44. This is not a topping or bottoming area. The last signal was a sell 10 period(s) ago.
The Moving Average Convergence/Divergence indicator (MACD) gives signals when it crosses its 9 period signal line. The last signal was a sell 5 period(s) ago.
Rex Takasugi – TD Profile
STRAITS TIMES closed up 15.790 at 3,190.170. Volume was 32% above average (neutral) and Bollinger Bands were 19% narrower than normal.
Open High Low Close Volume___
Short Term: Neutral
Intermediate Term: Bullish
Long Term: Bearish
Moving Averages: 10-period 50-period 200-period
Close: 3,195.34 3,120.30 3,234.84
Volatility: 9 17 15
Volume: 202,393,840 197,059,232 231,856,464
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.
STRAITS TIMES is currently 1.4% below its 200-period moving average and is in an upward trend. Volatility is low as compared to the average volatility over the last 10 periods. 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 16 periods.