FTSE STI closed 3,261.12, up 6.86 points or +0.21% with a total volume of 12.19b and a total value of S$1.75b. Total number of advance vs decline was 231 vs 217. Of the 30 component index stocks, 16 closed positive, 5 unchanged and 9 closed negative. The top 5 gainer component stocks were :-
1. JSH 500 US$ +0.920
2. Jardine C&C +0.360
3. KepCorp +0.140
4. SembCorp +0.100
5. SIA +0.070
5. SembMar +0.070
The top 5 loser component stocks were :-
1. DBS -0.070
2. JMH 400US$ -0.060
3. UOB -0.020
4. CityDev -0.020
5. Genting SP -0.015
US markets rebounded yesterday with at least 0.40% gain after more than 1.5% sold down the day before. Asian bourses were mostly positive for the day rebounding from yesterday selling down. Nikkei -1.27%, SSE +0.87% and HSI +0.25%. STI closed +0.21% in super heavy volume, breaking the recent high volume of 10b and thin value. 16 of 30 index stocks posted gain.
US markets rebounded mainly due to solid housing data and US Fed Chief's testimony of assuring stimulus still in tact within this year. That has partly driven the fear by investors on US Fed possible easing stimulus this year. On a bigger picture, the negative biased events still exist. Italy election outcome caused headache in forming coalition Government. While a re-election is ruled out, the delay of forming coalition Government or a Government formed which does not in line with EU policy of austerity will have impact on EU debt and globally. Judging from the market reaction to Italian election, investors have to be more careful comes this September when Germany also goes into the poll. Any unexpected result from Germany election, global stock markets can correct sharply. Italian election a prelude to the September German election.
US so-called sequester threat is just 2 days away and Congress has to come out something (or just kicking the can down the road by a few more months later ) before across the board spending cut. That will be more damaging than last December fiscal cliff threat. In fact this across the board spending cut was part of the fiscal cliff mentioned last year just that main focus was on prevention of tax hike then. Tax hike though putting more tax on citizens but at least the people still have the job and Government revenue due to tax increases. On the other hand, the across the board spending cut can result in jobs cut (raising the unemployment rate) and put the Government in a tight spot to spend to boost the economy and create job. The later will have more deadly impact though.
There was also news that China might tighten some monetary policies in particular property to prevent excessive liquidity flooding the nation and re-ignite the inflation woe. If that move is true, market can react negatively to it.
The most talk about and waiting correction should be coming. Last week when investors learned of possible easing of QE3 from Fed minutes, markets reacted negatively and yesterday the reaction from Italy election outcome was just as bad. That two events accounted for 1.5 sign for market correction. Might have another 1 or 2 warning signs before the correction really kicks in. While current market lacks positive catalysts to move up further, there are plenty of reasons (excuses) for it to correct. Shallow correction is about 3% to 6% pull back while more serious one can see between 7% to 10% pulling back, depending on events.
