Asian equities closed broadly lower amid uncertainties surrounding the US tax reform and ongoing North Korean issues.

Hang Seng index suffered from heavy selloff in the last trading hour, as investors spared no hesitation to take profit in one of Asia’s best performing markets this year to lock-in profit before year-end. In China A-share market, blue chips soared on a second day, which masked the bloodbath of hundreds of small cap stocks. Shenzhen Composite, where many of China’s technology and small-mid cap entrepreneurs listed, tumbled nearly 1.9% despite that Shanghai Composite finished 0.18% lower.

In Singapore, the Straits Times Index opened higher but ended marginally lower on Tuesday, dragged down mainly by property (CapitaLand, CitiDev) and offshore & marine (Kep Corp, SembCorp) sector. Banks remains resilient against the weak sentiment coming through from HK, but investors should be aware that the dividend yield of three local banks are stretched to their lowest level in  nearly a decade due to recent rally, which serves as a warning signal that the current valuation is  high and may not be able to sustain.

US equities closed broadly lower on Tuesday as volatility returns. Market participants remained sceptical on the final version Republican’s tax reform plan and took this opportunity to ‘sell on the facts’ after the massive tax-driven rally over the past few weeks. US dollar extended gains against euro and pound amid uncertainties surrounding the Brexit deal.

Stronger dollar weighed on precious metals such as gold and silver. Gold price has dropped to a critical support level of US$ 1,264 area. This level has been tested several times over the last two months, but a breakdown this support will open room for more downsides towards the next major support at US$ 1,210.

Technical Analysis:

OCBC

  • Price is challenging 127.2% Fibonacci Extension level of S$12.43 area, which is an immediate resistance level
  • Short term trend remains bullish as the 10-Day Simple Moving Average and SuperTrend (10,3) both sloping upwards, suggesting more upsides
  • Next major resistance level could be find at S$12.87 area (161.8% Fibonacci Extension)
  • Momentum indicator RSI has shot up to the overbought zone of 76.8% area, flagging the risk of profit-taking 

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