STI falls for 9^th consecutive day

Yesterday, the Straits Times Index (STI) tumbled another 1.6% to 3034.02, its lowest closing since December 2012. The sell-off yesterday was accompanied by trading volume of 468 million shares, above its 15-day moving average. The STI’s RSI currently stands at 21.8, which may suggest that the market is oversold. The fall yesterday also brought the STI further away from its 20-day moving average, marked at 3187.48.

The STI’s fall comes amid tension in the Middle East, as well as concern over a possible tapering of the Federal Reserve’s QE3 program.

Tension in Middle East adds pressure to equity markets

This week, world equity markets came off sharply after US Secretary of State, John Kerry said that the United States will hold the Syria government responsible for using chemical weapons on its civilians last week. His comments had the US equity markets retreating as much as 0.8%. Asian markets followed the US’s declining footsteps during Tuesday’s trading session.

On Monday, a group of United Nations investigators were in Syria to investigate a chemical attack that left 355 dead and thousands injured.

World equity indices fall on Bernanke’s remarks

Meanwhile, markets also continue to be dogged by worries of the Fed’s potential tapering of QE3. Since Bernanke’s first hint in May that the US central bank might reduce the magnitude of its bond purchasing program should the US economy be on good track to recovery, global markets have been in decline . To date, the STI index had retraced 12% from its high of 3464.79 on 22 May this year.

Source: Macquarie Research - 28 Aug 2013