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Fiscal Cliff Deal Pumps Global Markets With Confidence
Singapore Market Commentary | 04 January 2013
By: Louis Kent Lee
Articles (199) Profile

2013 was ushered in with a bang as the fiscal cliff was averted at the eleventh hour as Congress agreed to a series of tax hikes that will allow the US to avoid fiscal catastrophe that would have come with steeper increases and sharp spending cuts. The Standard & Poor’s 500 index shot up 2.5 percent on 2 January 2013, marking a remarkable start to 2013, which in turn lifted overall confidence in global markets. Asian stocks rallied on 2 January 2013 on the back of the US confidence boost.

In the lion city, the Straits Times Index (STI) reflected a gain of 19.7 percent for the year of 2012, despite the slower growth experienced. In 2012, the economy reflected a growth of 1.2 percent as compared to the government’s target of 1.5-2.5 percent. Mr Lee Hsien Loong, Prime Minister of Singapore estimates that the growth moving forward to be about 1-3 percent as he still expects global demand to remain weak.

Meanwhile in Singapore’s corporate news, Global Logistic Properties, announced its first direct lease to supermarket giant Tesco, in eastern China. Located at GLP Park Jiashan, Zhejiang Province, the leased area is approximately 10,400 square metres, which marks a considerable sizable lease to one of the biggest names.

Looking at the technical chart of the STI, the 3,200 level seems to be a considerable support level to fall back upon, falling below this level will see the next immediate support at 3,110. Although momentum remains considerably positive, as seen by the formed bullish crossover of its 10 and 20-day moving averages, which are also trending up strongly, its daily Moving Average Convergence Divergence is initiating a negative crossover, while the stochastics indicator suggests that the current market is heavily overbought. An immediate resistance level would be at around 3,260.

The STI closed at 3,225.22 points on 4 Jan 2013.

Louis is a qualified accountant with the ACCA, and is the Research Editor at Shares Investment magazine.

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