US equity markets suffered from the biggest intra-day losses since April, with Nasdaq tumbling over 2% against the backdrop of re-escalating trade tension between US and ‘China-EU coalition’.

The latter tried to fight against trade protectionism warning that bilateral actions will potentially lead to global recession.

Asian markets closed broadly lower on Monday after the Treasury Department of US reportedly heightened scrutiny of Chinese investments in key US industries under an emergency law. This could potentially further deteriorate the relationship between Beijing and Washington, which is already under the threat of escalating trade disputes last week.

Hang Seng Index dived below 29,000 mark – a psychological support level for the first time in over six months. Breaking down below this level means loss in confidence, and open room for more potential downside in the days to come. Technically, Hang Seng has entered a bearish trend with its SuperTrend (10, 3) and 10 Day-SMA both slopping downwards.

Chinese central bank’s move to inject over US$100 billion of liquidity to help SMEs over the weekend failed to boost market confidence, instead, it highlighted the downward pressure the government is facing amid slowing exports and rising default risks. Worries of a slowing growth of China economy is weighing on Asian markets.

The fundamental elements are not as strong as what we have seen in the past year, besides US, China and EU have both shown signs of economic cooling down in recent months. Trade disputes between US and other major economics have also added selling pressure on equity assets.

In Singapore, the Straits Times Index has broken down a key support level of 3,300 and dived further into the 3,250 area. Its immediate support can be found at around 3,200 points. Profit-taking activities in banking, telco and property sector continued to weigh on the index, with outlook clouded by trade and growth risks.

US NDAQ 100 - Cash

By Margaret Yang in Singapore

 

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