Wednesday, April 4, 2012

Market Summary -- 4th Apr 12

FTSE STI closed 2,985.04, down 29.94 points or -0.99% with a total volume of 1.69b and a total value of S$1.06b.  Total number of advance vs decline as 105 vs 267.  Of the 30 component index stocks, 2 closed positive, 3 remained unchanged and 25 closed negative.  The 2 gainer component stocks were :-

1. JMH 400US$  +0.250
2. GLP  +0.010

The top 5 loser component stocks were :-

1. Jardine C&C  -1.230
2. JSH 500US$  -0.310
3. DBS  -0.310
4. UOB  -0.250
5. SGX  -0.160

US markets closed in the red yesterday after Fed minutes indicated that US Fed will not consider stimulus program at the moment unless the economy getting worse off.  That comment caused sell off in the market which Asian bourses also followed.  Nikkei closed -2.29% and both SSE and HSI closed for holiday.  STI fell 0.99% in a thin volume day with total volume less than 2 billion as compared with past 2 days of more than 2 billion.  Only 2 of the 30 index stocks managed to closes positive.

European bourses opened in the red in reaction to US Fed minutes and data pointing to Euro-region Services and Manufacturing contraction further weighed the sentiment.  In addition, US future also in the red and that caused investors in particular the nervous and weak holders to sell off in STI.  DBS continued yesterday slide with another 2.25% drop.

While the fact of US Fed does not need to apply stimulus at the moment when US economy is recovering, markets being greedy as wanting the cheap money felt disappointed and sold down the market.  The selling down logically is considered over-reaction, panic and irrational selling.  As mentioned before, it is better for US Fed not to have stimulus or QE3 then having one.  Meanwhile, economic data from Europe still weak and that is nothing of a surprise.  EU debt nations are undergoing restructuring and reform to reduce the debt.  That method will not overnight solve the debt issue and reversed the economic situation sharply.  Should any over-reaction to that by selling down the markets is none other than panic selling.

Investors should bare in mind that global economy is recovering slowly and should not expect a sharp rebound like what we have seen in 2009 and any stimulus package should not apply just for the sake for apply or just to please the market. 

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