Market Update 19 September 2016 September 19, 2016
This week’s focus
Some key events happening this week will be Bank of Japan (BOJ) press conference on Wednesday and the Federal Open Market Committee (FOMC) meeting on Tuesday and Wednesday (FOMC statement will be released at Thursday 2am, Singapore time).
BOJ press conference will shed some light on the effectiveness of the BOJ’s policy measures to date, which will determine the monetary policy for BOJ, moving forward.
With the U.S. economic data this year showing signs of U.S. economy recovery, the Federal Reserve is running out of excuses for delaying a rate hike.
However, with the upcoming U.S. presidential election in early November and slower than expected jobs growth data in August (151k in actual vs 180k in consensus), FOMC is likely to hold the interest rate steady till the end of the year.
Straits Time Index (STI)
Last week, STI index traded in between 2847.50 and 2791.38 points in a short trading week due to Hari Raya Haji. STI was relatively volatile, opening last week with a drastic gap down because of heavy selling on the US market on the last trading day (09/09/2016) 2 weeks before, this persisted for the rest of the week. However, on Friday, STI recovered strongly and managed to close at 2,827.45 on Friday. STI is down 45.88 points, or approximately 1.6% for last week.
STI is expected to trade flat the next 2 days as investors are on “risk-off mode” sitting on the sideline awaiting announcements from BOJ and FOMC.
Oil Market
As mentioned on previous market update in late August, crude oil price retraced when it reached estimated USD $50 per barrel. Since then it has struggled to regain the upward momentum.
WTI Crude oil price closed at US$43.03 per barrel on Friday, 16/09/2016.
On Sunday, 18/09/2016, Venezuelan (Venezula is the country with the largest proven oil reserves) President Nicolas Maduro said that a deal between OPEC and non-OPEC countries could be announced this month.
On the same day, there was a report on clashes in Libya, which halted the loading of the first oil cargo from Ras Lanuf in close to two years. This raised concerns of a new conflict over Libya’s oil resources.
In my personal opinion, both news should act as a positive catalyst in fueling the upward momentum of oil prices.
UCO pricing chart:
Source: POEMS 2.0
Investors may want to consider looking at positive price co-related oil ETFs like United States Oil Fund (USO) or Proshares Ultra Bloomberg Crude (UCO) if they wish to ride the oil price rally.
Disclaimer
These commentaries are intended for general circulation. It does not have regard to the specific investment objectives, financial situation and particular needs of any person who may receive this document. Accordingly, no warranty whatsoever is given and no liability whatsoever is accepted for any loss arising whether directly or indirectly as a result of any person acting based on this information. Opinions expressed in these commentaries are subject to change without notice. Investments are subject to investment risks including the possible loss of the principal amount invested. The value of the units and the income from them may fall as well as rise. Past performance figures as well as any projection or forecast used in these commentaries are not necessarily indicative of future or likely performance. Phillip Securities Pte Ltd (PSPL), its directors, connected persons or employees may from time to time have an interest in the financial instruments mentioned in these commentaries. Investors may wish to seek advice from a financial adviser before investing. In the event that investors choose not to seek advice from a financial adviser, they should consider whether the investment is suitable for them. The information contained in these commentaries has been obtained from public sources which PSPL has no reason to believe are unreliable and any analysis, forecasts, projections, expectations and opinions (collectively the “Research”) contained in these commentaries are based on such information and are expressions of belief only. PSPL has not verified this information and no representation or warranty, express or implied, is made that such information or Research is accurate, complete or verified or should be relied upon as such. Any such information or Research contained in these commentaries are subject to change, and PSPL shall not have any responsibility to maintain the information or Research made available or to supply any corrections, updates or releases in connection therewith. In no event will PSPL be liable for any special, indirect, incidental or consequential damages which may be incurred from the use of the information or Research made available, even if it has been advised of the possibility of such damages. The companies and their employees mentioned in these commentaries cannot be held liable for any errors, inaccuracies and/or omissions howsoever caused. Any opinion or advice herein is made on a general basis and is subject to change without notice. The information provided in these commentaries may contain optimistic statements regarding future events or future financial performance of countries, markets or companies. You must make your own financial assessment of the relevance, accuracy and adequacy of the information provided in these commentaries.
About the author
Chong Kai Xiang (Kai)
POEMS Dealer
Raffles City Dealing Team
Chong Kai Xiang (Kai) is an Equities Dealer in the Raffles City Dealing Team, and currently provides dealing services to over 35,000 trading accounts. Kai frequently conducts seminars to enrich his client’s trading and financial knowledge. Apart from this, Kai also provides weekly market updates to his clients to keep them informed and up to date on their stock holdings. Kai holds a Bachelor Degree of Finance from the SIM University – UniSIM and was awarded the CFA Singapore Gold Award and CFP® Certification Achievement Award in 2015.
