Stock markets continued to tumble on Friday. The Straits Times index (STI) lost 0.8 per cent to a new low this year at 2,698 points. Investors were fleeing the equity markets.
Gold sufferred with a 5.9 per cent drop to US$ 1,639 per oz. It finally came off from a high of nearly US$1,900 on Wednesday. Even investors were abandoning a safe haven asset in a big way.
Light sweet crude oil lost 6.3 per cent to US$80.51 a barrel. Brent crude oil was down 4.4 per cent to US$105.49. Crude oil declined because of uncertainty in global economic growth in the future.
Some Asian currencies and Australian dollar declined against US dollars. Singapore dollar was trading at a high of S$1.1992 to US$1 at the start of this month but weakened considerably (-8.1 per cent) to S$1.2974 to US$1. Australian dollar is now below parity to US dollar. (A$1 = US$0.9787) It used to be above US dollar recently. Investors are pulling funds out of assets in this part of world and repatriate funds back to US. They consider assets were now riskier than before and made that move.
To make life difficult in Singapore, inflation rate for August was stubbornly above 5 per cent. The Consumer Price Index (CPI) rose 5.7 per cent over the same month of last year. Food prices was 3 per cent higher and this can be too much to take.
To make matter worse, the three local banks are cutting interest rates for savings accounts to mere 0.05 per cent next month. This can hardly help savers/householders to combat inflation. Banks are finding it hard to make good profits on their investments and lending activities in this downbeat environment. What more can I say of many people who wanted a decent return on their excess cash. This is going to be tough.
Copyright © 2011, limkimtong for Living Investment
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