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Stock Markets Bleed After Lunar New Year
Singapore Market Commentary | 12 February 2016
By: Joey Ho
Articles (30) Profile

Asian stock markets plunged into the red after the Lunar New Year break, catching up with a wide spread global sell off that has wiped billions off valuations amid renewed concerns about the global economy and the possibility of a global recession.

Oil prices fell below US$28 per barrel as the International Energy Agency (IEA) warned prices could fall further amid a growing oversupply as global demand growth weakens. In its monthly report, the IEA forecast that global oil surplus in the first half of 2016 would exceed previous estimates as Organization of the Petroleum Exporting Countries had “all turned up the taps” in January.

Wall Street plunged into the red on Monday as investors scurried to safe-haven assets as oil prices remain under pressure. The Dow Jones Industrial Average shed 2.5 percent during trading before a late rally lifted the index from the day’s low of 15,803.55, while the Standard and Poor’s 500 index ended 1.4 percent lower.

In Singapore, local bank stocks took a beating with all three losing close to 1.7 percent each. The Straits Times Index, which resumed trading on Wednesday, was down 2.4 percent at the start of trading.

In Japan, the Nikkei 225 extended losses by 2.3 percent to close at 15,713.39 on Wednesday, following a 5.4 percent decline the day before. The index has entered into a bear market after losing more than 20 percent since mid-2015. Japanese bank stocks were not spared from the sell off, banking giant Mitsubishi UFJ lost 7.1 percent and Sumitomo Mitsui followed with four percent.

Over in the United States, Chair of the Federal Reserve, Janet Yellen, hints more rate hikes despite market turmoil, adding that the economy is in many ways close to normal. Yellen specifically highlighted that the unemployment rate has declined to below five percent and that inflation was likely to move up to two percent.

Following the global equity sell off, all eyes are now on the Chinese markets which will open on 15 February 2016.

Equipped with a bachelor in banking and finance, Joey covers the finance, technology and healthcare industry in Singapore.

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