STI ends week 4 points up despite Friday's fall

WHEN oil fell below US$30 a barrel in February, the worry that descended on markets was the threat of deflation, which Investopedia defines as "a general decline in prices, often caused by a reduction in the supply of money or credit... Declining prices, if they persist, generally create a vicious spiral of negatives such as falling profits, closing factories, shrinking employment and incomes, and increasing defaults on loans by companies and individuals."

Whether or not deflation will really take root in the economy remains to be seen now that oil has rebounded to above US$40 per barrel, but the definition above certainly applies to the local stock market, where the Straits Times Index on Friday dropped 10.48 points to 2,734.91, though it di…