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Markets Rattled By Global Growth Fears

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Wall Street stocks sold off sharply on 22 March 2019, with all three major US stock indexes posting their biggest one-day percentage declines since 3 January 2019. The latest sell-off was sparked off after the Federal Reserve abruptly abandoned projections for any interest rate hikes in the rest of 2019 amid signs of an economic slowdown.

Instead of cheering to the news, investors feared that the Fed’s dovish turn was a result of an impending slowdown in the US economy. Investors sold off short-term treasuries and piled on long term government bonds which usually considered higher risk. This culminated a yield curve inversion whereas US Treasury 10-year note yields dropped below three-month Treasury bill yields – for the first time since 2007. A yield curve inversion is often viewed as an indication of near-term risk or a potential harbinger of recession. Also, the inverted yield curve seemed to confirm investors’ fears of a global economic slowdown.

Meanwhile, the next possible market-moving catalyst will be the fresh China-US trade talk. Top US trade officials will visit Beijing on 28-29 March 2019 for a new round of trade talks, followed by a trip to Washington by China’s top negotiator in early April. President Donald Trump warned that US tariffs on Chinese imports could remain in place for a “substantial period” to ensure Beijing complies with a trade agreement.

Late into the fortnight, however, the US market recouped some of the losses with the Dow Jones Industrial Average ended flat at 25,717.46. The broad-based S&P 500 edged up 0.2 percent ending at 2,815.44, while the tech-rich Nasdaq Composite Index rose 0.5 percent to 7,669.17.

Meanwhile, the Shanghai composite rose 2.3 percent to 3,090.76 while the Hang Seng also closed 0.1 percent higher at 29,051.36. However, mood is unsettled in Japan, Nikkei 225 dropped 1.1 percent to 21,205.81.

On the local front, the Urban Redevelopment Authority (URA) launched its draft master plan 2019 – a blueprint that charts out the Singapore Government’s plans for land use over the next 10 to 15 years. Under its draft master plan, URA plan to add over 20,000 more homes in the central business district (CBD) and Marina Bay area so that people can live closer to their workplaces.

Over the fortnight, the local benchmark Straits Times Index (STI) gained 0.4 percent to end at 3,212.88.

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