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East Europe Cease Fire; Mixed World Manufacturing Data
Singapore Market Commentary | 05 September 2014
By: Shane Goh
Articles (99) Profile

Over the past 2 weeks, the potential escalation into World War III took a back seat as Russia and Ukraine agreed to a cease fire. While it remains to be seen if the temporary peace will last, for the moment, Russia’s president, Vladimir Putin, seems to have appeased his Western counterparts.

Before 26 August, the S&P 500 index has never closed above the 2,000 mark. Over the next 7 trading days, the index ended 5 of them higher than that level.

As reported by Bloomberg, market euphoria over the past 3 years has caused price-to-earnings ratios variance among the 50 biggest companies on the index to narrow to near-record lows. The lowest level was attained in 2007, near the end of the previous stock market rally.

Optimism was shared on the manufacturing front, as the US’ Institute for Supply Management’s Index climbed to 59 in August; the highest level since March 2011, up from 57.1 a month earlier.

In Asia, however, the manufacturing sentiment from China was far from positive as its pair of Purchasing Managers’ Indices (PMI) showed a slowdown in pace of activity.

The official PMI came in at 51.1 in August, below its 27-month high of 51.7 in July, while the HSBC PMI, a measure weighted towards small companies, fell to a 3-month low of 50.2.

On local shores, Singapore’s PMI did not fare better. At 49.7, the gauge contracted and dipped below the 50-point mark for the first time this year, dampening hopes of sustainable recovery in manufacturing.

Despite the lacklustre performance, the Straits Times Index eked out a 16.2 points gain to close the fortnight at 3,341.73 on 5 September 2014.

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

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