Rebound in US indices last night was mainly driven by the energy sector, which benefited from higher oil prices as Washington banned oil imports from Iran.

Market sentiment, however, remained fragile as trade tension is still clouding the trading atmosphere. Volatility index settled a little bit but remained at elevated levels compared to last week.

Technically, the Nasdaq index has followed the other two – Dow and S&P 500 -into bearish territory this week, with its SuperTrend (10,2) and 10-Day SMA flipping downwards for the first time in over three months. A technical correction could lead to further downside if it breaks down a psychological support at 7,000 points.

Dollar Index gained 0.6% to 94.3 area overnight, with the ‘EM sell-off’ carrying on as the major market theme in recent months. This trend has showed little signs of stopping any time soon because US economy has settled on a solid foot this year, and policy is likely to diverge further between Fed and the rest of the world.

Trade tension has affected market sentiment in a negative way, but we have little evidence yet showing its influence on business decisions. This Saturday’s China official PMI is an important gauge to watch for clues of any demand contraction as a result of escalated trade disputes in June.

In Singapore, the Straits Times Index has regained some strength yesterday as HK market bounced back from intra-day lows. Higher fuel prices will provide some support to local names, particularly offshore & marine.  Its immediate support can be found at around 3,200 points. Recent drop in share prices has attracted some ‘buy on dips’ as we are getting closer to end of June, which is seasonally a bad month for stocks and shares.  

US NDAQ 100 - Cash

By Margaret Yang in Singapore

 

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