As reported in the news over the weekend, China announces retaliatory tariffs on US$34 billion worth of US goods. This could be the start of an impending global trade war.
Trade war, together with the recent interest hikes by Fed and any further rise in oil prices is likely to slow down economic growth.
Since the start of 2018, the STI Index has been struggling to break out convincingly. Each correction after an attempted rally failed to achieve higher highs. Hence for the last 6 months, the STI has been largely range bound between 3330-3640.
However, the STI has just broken below key support level of 3350 and hit below 2018 low of 3338 this morning. The next immediate support level and key support level is around 3270 and 3200. (Please see chart below).
Are we be witnessing a major correction? If the trade war escalates further, it maybe the start of a bear market.
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| STI Chart 15.6.2018. Click to Enlarge. |
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