Markets rally on positive US economic data, China stimulus

But investors keeping a wary eye on geopolitical developments, looming US polls

- Ven Sreenivasan

While casting a wary eye on geopolitical developments and the impending US presidential election, markets nevertheless rallied on the back of the strength of the US economy and stimulus roll-outs in China.

On Wall Street, the S&P 500 and the Dow Jones Industrial Average hit new record highs on Oct 11, boosted by positive data flows and good quarterly results by banks.

The latest Bureau of Labour Statistics numbers showed US consumer price index was 2.4 per cent for the 12 months ended September, slowing from a 2.5 per cent annual rate in August. The US Federal Reserve's preferred "core" measure, which eliminates volatile food and energy prices, showed prices rose 3.3 per cent, compared with expectations of a 3.2 per cent rise. It was up a tenth of a percentage point from August.

Meanwhile, the US producer price index or PPI was unchanged on a monthly basis in September, compared with the 0.1 per cent rise expected by economists. On another front, a preliminary reading of the University of Michigan's October consumer sentiment index stood at 68.9, compared with analysts' estimate of 70.8.

All this comes on the back of labour statistics showing unemployment at near record lows and hirings remaining steady. Stable labour market, resilient consumer sentiment and muted inflation suggest an underlying robustness within the US economy.

The Dow rose 1.21 per cent for a week to a record 42,863.86 points, while the broader S&P 500 gained 1.11 per cent to a new high at 5,815.03 points. The Nasdaq was up 1.13 per cent for the week to 18,342.94 points.

In Singapore, after consolidating within a tight range for much of the previous two weeks, the Straits Times Index edged 0.4 per cent down to 3,573.76 points despite booking net institutional inflows into the market, especially to stocks led by DBS, Hongkong Land, Wilmar, Seatrium, iFAST, Genting, UOB, Sembcorp Industries, Sats and Frasers Logistics & Commercial Trust.