Singapore shares rallied on Friday, boosted by upbeat earnings from both the domestic and the US market. 

The Straits Times Index soared 30 points to 3,386 points, reaching its highest level in over two years. Banking, property and industrials were the leading sectors, registering 21%, 31% and 15% year-to-date returns respectively. Looking ahead, blue-chip companies yet to announce third-quarter earnings this week include Ascendas REIT, HPH Trust, Sembcorp Industries, StarHub and UOB Bank. 

The Singapore equity market has underperformed against regional peers the Nikkei and the Hang Seng over the last three months, and there is a chance for a ’catch-up’ rally if earnings beat market expectations. 

In the US, the big technology companies – Alphabet, Amazon, Intel and Microsoft – smashed analysts’ forecast with upbeat earnings. The Nasdaq soared 2.2% to fresh high of 6,701 points on Friday night. 

Meanwhile, the White House is expected to announce Mr Trump’s nominee for Fed chair this week before the President leaves for his first Asian trip in early November. Two popular candidates with diverging monetary views – John Taylor of Stanford University and Fed Board Governor Jerome Powell – are widely expected to be on top of Trump’s list. 

The US dollar index is currently riding an upward trend as both the euro and the yen showed signs of weakness after Abe’s election victory and dovish-biased ECB meeting results last week. Technically, EUR/USD has formed a ‘head-and-shoulders’ pattern in its daily chart. This pattern usually suggests a bigger pullback in the weeks to come. 

Traders will also be eyeing the Bank of England’s interest-rate decision this Thursday. The market expects the central bank to lift its base rate by 25bps to 0.5%, according to Reuters’ forecast. Recently, strong GDP and inflation readings suggested there is need for tightening, and this could kick off the start of a cycle. GBP/EUR climbed for a fourth day to the 1.132 area this morning. 

Technical Analysis:

EUR/USD

  • The 10-Day Simple Moving Average and SuperTrend (10,2) are both sloping downwards
  • A ‘head-and-shoulders’ pattern has formed after the price broke down below the 1.167 area


 
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