Singapore’s stock markets end April trading on a flat note. Meanwhile, others in Southeast Asia post modest losses. It’s well-known that the markets in this region are tied to their western counterparts. A recent example is the neutral to negative territory that many indices have embraced. Currently, economic factors in the United States are influencing the landscape in Asia. Here’s what investors and traders need to know.
An Equity Sell-Off?
Asian and Singaporean markets have reacted to recent data emerging from the US. Concerns revolve around inflation rates combined with the massive (and growing) fiscal deficit. This has led to equities being sold off, while simultaneously boosting treasury yields. As bond prices have also fallen, ten-year treasury yields are experiencing levels unseen since 2014. In other words, investors are looking to avoid the turbulent nature of open-market equities. Instead they favour more stable asset classes.
Industrial assets, real estate and technology posted losses in Singapore. Those losses outpaced the minor gains made by financial holdings. Meanwhile, Singapore Airlines, Golden Agri-Resources and CapitaLand Commercial Trust – among others – saw no movement.
Key Data From Monday 23 April
- Straits Times Index added 6.16 points to close at 3,579.54. Volume was 1.57 billion shares worth 1.14 billion Singapore dollars.
- Singapore Exchange rose 1.85 percent
- Yangzijiang Shipbuilding fell 1.65 percent
- Keppel Corp rose 0.97 percent
- SembCorp Industries fell 0.62 percent
- CapitaLand rose 0.54 percent
- Oversea-Chinese Banking Corporation fell 0.22 percent
- United Overseas Bank fell 0.20 percent
Another factor to consider is that Singapore interest rates correlate with those emerging from the US. The end result is clear. Rising government bond yields within the US marketplace will carry over to Singapore. Although the banks normally benefit from bullish yields, they can have a debilitating impact upon other sectors. The property market and technology stocks provide two examples. The notable lack of clear market leaders within Singapore is a signal that traders are adopting a prudent approach in regards to equities.
A Buying Opportunity?
All this does not necessarily mean Singapore markets will enter bearish territory. If the United States markets can emerge from the red, Asia will soon follow. This is arguably an interesting opportunity for CFD traders. The nature of this mode can provide profits even during negative market conditions. The real question is how stagnant the markets will remain in the coming days. Further news emerging from the United States could translate to further instability.
CFD traders and those involved with treasuries should keep a close eye on the latest news. Sudden movements will cause reactions on both sides of the world. Many online trading platforms provide real-time updates. This allows decisions to be made when the time is right. While the Singapore markets might still be in the red, this should not be a cause for undue long-term concern.