During the week, US risk-free rates went on something of a roller-coaster, rising to as high as 3.92% on Feb 22 before easing slightly to 3.89% as at Feb 24. These rates had fallen to as low as 3.49%, in January before rebounding.
Similarly, yields on the 10-year SIngapore Government Securities (SGS) - which had been as low as 2.8% in January, rebounded as well. However, week-on-week the yield was flat at 3.27% as at Feb 24. But, this is still near the high for this year.
No surprise then, that equities fell. The Straits Times Index lost 46 points week-on-week to end at 3,282 on Feb 24. Sadly, the STI fell below both a strong support and its still rising 50-day moving average which is currently at 3,303. This, coupled with the former support at 3,306 should be viewed as the resistance area. The 100-day moving average at 3,232 provides support.
Undoubtedly, as the STI enters what could turn out to be a trading range, nimble punters could ‘trade the range’.
As an example, DBS which ended the week at $34.40 could find support at $34 and stage a rebound. Short-term support for UOB could appear at the $29.40-$29.50 range.
Longer term market players, however, may decide to sit out the volatility and stay on the sidelines.
See also: STI’s upside from breakout remains valid as risk-free rates fade, but stay watchful for FOMC
