The Edge Singapore Published on Fri, Oct 01, 2021
There is plenty to be nervous about, but it is unlikely to be the debt ceiling – or as we found out on the last day of Sept – the US government shutting down. The US government remains open. However, the messaging of tapering – where the US Federal Reserve tapers its bond buying programme – is causing the 10-year US treasury yields to rise, and the US dollar to firm. The Dollar Index is now at a one year high. The decline in dollar liquidity – albeit slight – is likely to cause local interest rates to firm. The problems in China around China Evergrande Group, a fuel shortage, and a decline in economic activity is a separate issue.
Although the Straits Times Index fell 10 points during the week – which sounds modest – it fluctuated a bit, moving above 3,090, before ending on Oct 1 at 3,051. This takes the STI below its 200-day moving average currently at 3,078. Since this took place on a Friday, before a weekend, it’s a negative move. In addition, the 50- and 100-day moving averages have turned down; ADX is turning up after a temporary reprieve; the DIs are negatively placed. The next immediate support appears at 3,000 which is a psychological roundophilic number, but this is unlikely to hold. All in expect a couple of volatile months before the Capricorn effect sets in, in Dec.