Weaker-than-expected US 4Q GDP readings did not stop money from flowing into the stock market last Friday. US indices finished at record highs with a strong rally in the technology and healthcare sector, as investors remain positive to the earnings season and weaker US dollar lifts the outlook for US exports and economic growth.

The US economy expanded at an annualised pace of 2.6% in the fourth quarter, which indicates steady recovery despite the figure falling short of market’s earlier forecast of 3% growth. The US dollar resumed its downward trajectory after President Trump’s ‘strong dollar’ comment in the Davos forum and is trending lower this morning. 

The S&P 500 index broke out above a key 161.8% Fibonacci Extension level of 2,846 points with a strong, decisive long bar. Its next key resistance level could be found at around 2,915 area, which is the 200% Fibonacci extension. Momentum indicator MACD is still trending upwards, suggesting the bull trend is carrying on and there shows no sign of stopping any time soon.

US GDP - Advanced

US SPX 500 – Cash

Similarly, The Hang Seng Index broke out above its 161.8% Fibonacci Extension level on last Friday and opened higher this morning. The index has soared over 15% since early December and trading volume is picking up, suggesting that net inflow is buoyancy Asia’s most actively traded equity market. The next major resistance level could be found at around 34,000 area (200% Fibonacci Extension). This round of rally has been so fast and so long, that investors should not be taken away by complacency; instead, we should get prepared for the possibility of technical correction in the weeks to come. 

In Singapore, the Straits Times Index is facing some selling pressure at a psychological level of 3,600 points. This is likely to be a short, temporary correction, which allows profit-taking and hand-changing activities. This week there is nothing much on the earnings calendar so overseas market movement is likely to dominate local market. A technical correction is possible but is unlikely to change the broader picture of the bull market.  The immediate support level of STI could be found at around 3,500 points.

Hong Kong 50 – Cash

Singapore Earnings update:

Ascendas REIT

  • Net property income rose 1.8% yoy to S$157.6 million
  • DPU for 3Q declined marginally by 0.6% to 3.97 cents mainly due to one-off property tax refund in the prior year
  • Overall portfolio occupancy rate at 91.1%, up from 90.2% a year ago but declined from 90.2% in the previous quarter due to increasing supply and intensified competition
  • A-REIT’s performance for FY17/18 is expected to remain stable

 

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