Weak oil prices add to Brexit woes, but STI unchanged for week

ACCORDING to conventional wisdom, it wasn't "Brexit" fallout that dragged the Straits Times Index (STI) 15.13 points down on Friday to 2,847.04 but a 5 per cent plunge in oil prices.

Macquarie Warrants (MW), in its daily newsletter, said the drop in oil prices was due to growing concerns that a gasoline or petrol glut is due to persist. "Although gasoline demand usually peak in the summer as people go on road trips more frequently, this year, refineries have already been producing gasoline, so the market is amply supplied," said MW.

Then again, the STI had held up remarkably well in the fortnight after Britain voted to leave the European Union, its traditional reputation as a "defensive" play probably standing it in good stead. So maybe softer oil provided the excuse to take some money off the table. Whatever the case, the STI closed virtually unchanged over the week - not too bad considering the turmoil that Brexit was supposed to unleash.