Market Update 22 August 2016 August 22, 2016

Straits Time Index (STI)

In a relatively quiet trading week, STI index traded in between 2830 to 2881 points last week. STI closed at 2,844.02 on Friday, up 23.38 points, or approximately 0.8 percent.

With the upcoming speech titled “The Federal Reserve’s Monetary Policy Toolkit” by the Fed Chair Janet Yellen on Friday, investors are expected to take the sideline to await a clearer picture. STI is expected to trade within a tight range this week.

With the growing U.S. economy strengthening the case for a rate hike, investors can consider looking at the financial sectors which top line will stand to gain from the hike.

Oil market

Crude oil price continued its upward momentum after the rebound off the region of USD $40 after the Saudi Arabia’s energy minister and Russia’s Energy Minister both signaled that there may be a possibility of oil market rebalancing.

Crude oil price closed at USD $48.52 per barrel on Friday, 19/08/2016.

The current rally in oil price still appears more to be speculative due to the cooperation news than any fundamental changes in the supply and demand for oil.

With the oil price now close to the technical resistance level of USD $50, which is also said to the breakeven price level for U.S. shale oil companies, the upward momentum is likely to ease.

Investors who think that oil price may retrace can consider looking at negative price co-related oil ETF like Proshares Short Oil & Gas (DDG) or Proshares Ultrashort Bloomberg Crude (SCO) if they wish to ride with the oil price rally.

U.S. market Indices

The Dow Jones Industrial Average (DJI), NASDAQ Composite (IXIC) and Standard & Poor’s 500 (S&P) indices all closing near all-time high last Friday. With the upcoming speech by Janet Yellen, U.S. markets are also expected to be trading in a relatively tight zone with increased volume on Friday. The direction of the movement will be depending on the wordings for her speech.

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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.