Ominously, Allianz GI says oil prices are another story. There has been a significant rise in energy prices, with both West Texas Intermediate (WTI) and Brent crude trading above US$100 per barrel – twice as high as two years ago. This is likely to leave its mark on economic growth. In the past, a doubling of the oil price within two years has repeatedly led to a recession.
Our own Straits Times Index has ‘failed’, as prices fell back to 3,225, below the breakout level of 3,240, invalidating the upside of 4,000. In falling below 3,240, the STI has also fallen below its 50-day moving average at 3,277, and the 100-day moving average at 3,226. Quarterly momentum which had turned down in the last week of Feb continues to fall. Watch for some support - initially at 3,175 and then at 3,100.
