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STI Back In The Red For 2014
Singapore Market Commentary | 17 October 2014
By: Shane Goh
Articles (99) Profile

Since hitting its intra-day record-high on 19 Sep-14, the US Dow Jones index has shed 7.1% to close at 16,117.24 on 16 Oct-14. In Europe, the German Stock Index DAX 30 mimicked its US counterpart by dropping 14.6% from its year-high to close at 9,598.25 on 16 Oct-14.

The doubling effect seen is attributed to the poor fundamental data coming out of the country and Europe. German factory orders plunged 5.7% in August, the most since 2009, hampered by a slowing euro area economy and geopolitical risks.

As Germany is the key driver for the European economy, its dismal performance has resulted in a stalling of growth for the Eurozone in 2Q14 while inflation slowed to the weakest level for almost 5 years.

The western blemish was shared by China, whose consumer inflation fell to its 5-year low in Sep-14 due to falling prices for food, fuel and other commodities. The consumer price index rose 1.6%, below Aug-14’s 2% and the official annual target of 3.5%.

Back home, Singapore’s 3Q14 GDP performance was up 2.4% y-o-y, spurred mainly by the services sector while manufacturing and constructions posted subpar growth. In the stock market, the recent sell off pushed our local barometer, the Straits Times Index, down 85.51 points over the past 2 weeks, or 2.6%, to close at 3,167.73 on 17 Oct-14. This is 11.94 points lower than the opening price at the start of the year.

Over the next two weeks, all eyes will be on the US Federal Reserve policy meeting at the end of the month. The market expects the announcement of the end of its Quantitative Easing programme, while looking out for clues on the first potential interest rate hike.

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

Please click here for more information about this author.


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