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Dow Jones Breaks 20,000 Psychological Resistance
Singapore Market Commentary | 03 February 2017
By: Jimmy Ng
Articles (51) Profile

Over the last fortnight, investors take cue from the West for market direction and sentiment with the China and Hong Kong markets closed to celebrate Lunar New Year. Markets welcomed US president-elect Trump’s inauguration with continued rally, as the Dow Jones finally broke the 20,000 psychological level for the first time ever in history.

Major indices on Wall Street all managed to achieve record highs last week. Dow Jones Industrial Average first broke 20,000 closing at 20,068.51 on 25 January, followed by marking out a historical high of 20,100.91 on 26 January. Unfortunately, the euphoria did not manage to stay long as markets reacted negatively to Trump’s executive order on immigration, and retraced to close flat at 19,884.91. Meanwhile, Nasdaq Composite index registered yet another record high closing at 5,660.78 on 27 January, lifted by expectations for Apple to post better-than-expected 1Q17 results. However, corrections brought the tech-heavy index to merely gain 1.6 percent to close at 5,636.2. Similarly, S&P 500 hit a record high at 2,298.37 on 25 January but ended the fortnight gaining 0.5 percent to close at 2,280.85.

Asian equities mostly traded sideways on relatively thin volumes amidst a festive mood. Japan’s Nikkei 225 lost 1.9 percent closing at 18,918.2, while Hong Kong’s Hang Seng Index and China’s Shanghai Composite Index each advanced 0.8 percent and 0.9 percent to close at 23,129.21 and 3,140.17 respectively.

On the local front, Singapore’s non-oil domestic exports in December 2016 rose 9.4 percent year-on-year, beating forecast and continued to expand from the strong 11.5 percent growth in November. In addition, Singapore’s inflation rose to 0.2 percent in December 2016 from zero percent in November, underpinned by higher cost of private road transport.

On the backdrop of optimistic economic data and positive news from the US, the Straits Times Index continued to extend its rally to close at 3,067.49 on 1 February, a 14-month high. Nonetheless, some profit taking activities saw the STI’s gain diminish to add 0.6 percent closing at 3,041.94. Meanwhile, FTSE Catalist climbed 5.5 percent, FTSE Small Cap increased 1.9 percent, while FTSE Large/Mid Cap rose 0.6 percent.

Sector-wise, FTSE ST Basic Material led the gains by adding 4.5 percent. Conversely, FTSE Healthcare was the biggest loser shedding 1.8 percent. Going forward, investors may want to pay attention to the US non-farm payrolls changes and unemployment data on 3 February, as well as the crude oil inventories data due to be released on 8 February.

Equipped with a Bachelor in Mechanical Engineering and a few years of experience in the finance industry, Jimmy hopes to help investors gain deeper insights and make well-informed decisions by sharing his perspective.

Please click here for more information about this author.

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