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Stock market action round up

federal reserveThe US Dow Jones Industrial Average and S&P 500 markets had a choppy period spooked by comments on the part of the Federal reserve that the tapering of bond buy backs may begin earlier rather than later. The Dow had given up some 700 points to hit 14880 from a high of 15600, whereupon it crawled back above the 15000 mark to hit 15100 before succumbing to more selling as strong jobs data was released. Ultimately it hit a low of 14600 before staging a rally back above 15200. Federal reserve comments that put some doubt on the buy back program pushed the Dow up to 15460, close to its highs. Interestingly the USD market has not reacted in the same way with currencies well off their highs, although starting to claw back some of the losses. It will be interesting to see if the index makes new highs above 15600, but it is expected that any bull run will be hampered by the ultimate news that tapering will certainly occur at some point in time and to find buyers at ever higher prices with the specter of that activity to come being hard to crystalize into higher market levels. Look for range bound movement between 14800 and 15800 for the near term with a break of either direction possible though with maybe short lived moves thereafter.

Thailand’s main SET index made new recent lows at the 1350 mark and has been unable to stage a decent rally as per other world markets back up towards its recent highs, reaching only 1450 before succumbing to selling. That drop took it to below 1400 with the index finishing the period at around 1440. Net fund outflows have been to blame as has foreign selling of Thai assets. It might be expected the weaker currency would make the SET more attractive but it appears both stocks and the currency are being sold from recent highs and have been unable to stage a comeback. The global asset inflation story for both stocks and property could be at or near its peak and so some care needs to be taken when taking any speculative positions in the SET. Look for the SET to remain trading in the range of 1350 to 1550 in the near term.

The UK’s FTS100M continued its dive from 6800 down to 6300 touching nearly as low as 6000 before returning with a new bull run. Steadily the index tacked on 100 points or so per week and saw additional strength as Ben Bernanke ensured that QE would remain on the table whilst the economy remained fragile. The index hit a high of 6654 before dropping back to 6583. Currency weakness also helped the index. With the pound giving up some four per cent of its value it has ensured buy side activity remains upbeat even at higher prices. Look for the index to trade in the 6250 to 6850 range with moves expected to be sharp on some trading days.

The Japanese stock market index, the Nikkei 225, moved in large steps throughout the period, and put in a low at the 12,000 handle only to recover a fair bit of ground. It ended the period at around 14,480 with much of the move based on a weaker yen from its high of 93 to the USD at the start of the period depreciating to 101 as the period ended. Moves were orderly. Most of the action was underpinned by US news lifting global markets rather than domestic factors. Look for the Nikkei to trade in a wide range from 13000 to 15500 in the coming month although it is expected to remain for much of the time at the higher end of that range. There is little catalyst for the index to move to its previous highs in any kind of a rush so look for less volatility in the period ahead.

The Singapore Straits Times Index failed to make it back to its highs from previous periods falling from 3450 to 3200 and then, after staging a slight rebound moving to as low as 3075 before finally pushing back up to 3265. Property prices remain a dampener on the stock market as does the specter of higher interest rates in the US and across Asia, i.e. an end to the monetary easing as per Federal Reserve statements. The tiger economy remains on a good footing but asset price appreciation looks like it has reached a high in recent periods with some further cooling expected.

In Australia, the ASX 200 failed to retake its highs at the 5225 level and sold off more from the lows at 4730 to reach 4650 before staging a moderate comeback rally to end the period at 4950. This in spite of a 13 per cent drop in the currency over a two month period which has not stemmed the selling and if anything may have exacerbated it. With the AUD steadying buyers have returned in keeping with a global rally courtesy of Federal reserve chairman Ben Bernanke’s statements. Still with commodity prices taking a major hit and the currency still at its lows the market looks poised to struggle to go higher, and a return to the highs may be hard to achieve.