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Straits Times 3,066.33 -44.02 -1.42%
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Dow Jones 25,628.90 -623.30 -2.37%
Shanghai Composite 2,869.81 -27.62 -0.95%
More Quantitative Easing Measures Fuels Global Markets
By: Nicholas Tan
Articles (71) Profile

A five year low US jobless claims and comments from the ECB President Mario Draghi that he is open to negative deposit rates strengthened the Dow Jones Industrial Average’s position, which rebounded strongly on 2 May, up 0.89% to close at 14,831.58. Applications for US unemployment insurance payments fell 18,000 to 324,000 in the last week of Apr, the fewest since Jan 08. The unexpected drop in US jobless claims eased concerns on the Labor front, as the market awaits a jobs and unemployment report from the Labor Department on 3 May.

In Europe, due to a record unemployment rate of 12.1% and manufacturing output contracting for a 21st month in Apr, the ECB cut the main refinancing rate to 0.5% from 0.75% and reduced marginal lending to 1% from 1.5%. These measures, rises the possibility of a negative deposit rate or new non-standard measures as the ECB moves closer to exhausting its conventional policy tools to stimulate the struggling Euro area.

Moving nearer to home, signs that growth in China – the world’s second biggest economy cooled for the second straight quarter was evident as the Chinese Purchasing Managers’ Index had a reading of 50.6 for Apr, lower than the Mar reading of 50.9. The slower growth of manufacturing activities in Apr and weakness in export demand confirms that growth slowdown will persist through Jun.

Back home, the total market value of companies listed on the Singapore Exchange (SGX) hit a new peak of $957b as at end-Apr, signaling that investors might be taking a cautious stance by shifting from penny stock play to blue chips as the STI is trading at a high and also on expectations of better results from large-cap companies. DBS Group posted 1Q13 revenue of $2.3b and a record $950m in net profit, up 2%.

The STI closed at 3,369.90 on 3 May with its short term uptrend channel still intact, with its immediate resistance at 3,470 and support level at 3,280.

Well trained in aspects of finance and business, Nicholas oversees the finance and manufacturing sectors at Shares Investment.

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