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THE week kicked off on a firm note as markets around this region took their lead from Wall Street where "bad news is good news"' was very much in prominence after stocks rallied following release of a shockingly weak May jobs report.
In the federal funds futures market the implied probability of an interest rate hike at next week's Federal Open Markets Committee (FOMC) meeting plunged from 30 per cent a fortnight ago to just 2 per cent on Monday; on Friday, this fell to zero.
Even so, and even with the implied probability of a July rate hike dropping from 50 per cent a few weeks ago to only 18 per cent now, stocks came under pressure in the latter half of the week. This was popularly known as "profit taking''; our preference is that once the short-covering was completed, it was time to resume shorting all over again.
Whatever the case, the Straits Times Index managed a 13 points rise over the five days to 2,822.97, including a 20.83 points loss on Friday. It was the fourth consecutive weekly gain for the index. Liquidity, however, has been the biggest absentee. Friday's total of 1.02 billion units worth S$919 million done was in line with recent weak averages.