Risk sentiment swung to the bearish side during US trading session last night after White House adviser Larry Kudlow denied President Trump’s earlier gesture of a softened stance on China.

Divided opinion inside the White House led to rising political and economical uncertainty on a global scale, which is disliked by market participants.

US Technology shares tumbled more than 1.5% last night, catching up with S&P 500 and Dow Jones in a southbound rally. Technically, Nasdaq 100 index has broken down below a key support level of 7,000 points, suggesting the downward trend is gaining momentum and could lead to more losses if political uncertainties continue to dominate market sentiment.

Disappointing performance in the US equity market last night will probably affect Asian markets, which have already suffered from heavy losses yesterday. Shanghai and HK were both down, with Chinese yuan breaking down a key support level of 6.60 against the greenback. A recent fast depreciation in yuan was resulted from central bank’s easing policy, strong US dollar and capital outflow. A weaker currency is supportive to Chinese exporters but will increase burden on highly leveraged industries such as aviation and properties.

‘Cash is king’ – a good way to describe current market condition when ‘risk-off’ sentiment prevails. US dollar strengthened against its major peers as demand for safety rose alongside with market volatility. Brent oil price climbed for a fourth day to US$ 77.6 area as last night’s US DoE commercial crude inventory unexpectedly decreased by nearly 10 million barrels, far more than consensus reading of 7.44 millions.

In Singapore, the Straits Times Index has demonstrated resilience against market headwinds, backed by strong oil prices. Its immediate support and resistance levels could be found at 3,200 and 3,300 points recently.

US Dollar Index – Sep 2018

By Margaret Yang in Singapore

 

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