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Uplifting US Economic Data Boosts Case For Fed Tapering
Singapore Market Commentary | 13 September 2013
By: Shane Goh
Articles (99) Profile

The all-important US unemployment rate for August was released last week, coming in at 7.3%, down from 8.1% a year ago and 7.4% in July, approaching the 7% target set by the Federal Reserve and reaffirming the anticipated cut of its Quantitative Easing program. Additionally, jobless claims for the week ended 31 August fell to 323,000, below consensus and almost matching the 320,000 level for the week ended 10 August, which was the lowest level of initial claims since October 2007.

On the Chinese front, latest data exceeded forecasts and indicates that the world’s second-largest economy is stabilising with headroom for growth. Factory output rose 10.4% year-on-year in August while central bank figures showed new bank loans of Rmb711.3b, outperforming estimates of RM700b, and shoring up confidence in the country.

Domestically, the Straits Times Index (STI) has climbed 129.62 points, after coming off its recent low on 28 August, to close at 3120.30 on 13 September, helped by traders covering their shorts to achieve a net neutral position ahead of the FOMC meeting next week.

Following the footsteps of LionGold Corporation and United Fiber System, Asia-Pacific Strategic Investments proposed an acquisition to obtain mining exploration rights to gold, silver, antimony and copper, prompting a more than 6-fold jump in share price to its highest level of $0.555 per share following the news announcement on 5 September.

All eyes will be glued to the Federal Reserve’s decision in the upcoming FOMC meeting scheduled on 17 to 18 September. However, do not hold your breath if Ben Bernanke decides to commence tapering, as consensus have indicated a general agreement amongst analysts that an impending minor reduction is on the table.

Currently pursuing his Chartered Financial Analyst qualification, Shane provides coverage on the property, consumer and environmental sectors at Shares Investment.

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