BULLS AND BEARS

Bank counters lead charge in relief rally

Rebound takes place as Fed meeting is expected to signal late rate hike

LOCAL shares rebounded yesterday as traders squared positions ahead of the United States Federal Reserve's meeting that is expected to signal a slow pace of interest rate increases.

The Straits Times Index (STI) rallied as much as 46.95 points, or 1.4 per cent, in afternoon trade before closing at 3,325.91, up 27.82 points or 0.8 per cent.

Financial stocks led the charge: DBS climbed 1.2 per cent or 24 cents to $20.78; UOB rose 0.8 per cent or 19 cents to $22.99; and OCBC gained 1.4 per cent or 14 cents to $10.13.

"Today's rebound was mostly across the board," IG market strategist Bernard Aw said yesterday.

"Despite the bounce, the reality is that STI remains largely within the recent consolidation band of 3,300 to 3,350. Attempts to break either side of the range were not sustained."

Most of Asia, except Japan, enjoyed a relief rally yesterday. Chinese equities shrugged off the bears and rebounded as traders bought into banks, energy and utility counters on prospects for accelerated reforms in the state-owned enterprises sector.

Shanghai was up 1.7 per cent, Shenzhen surged 1.98 per cent, while Hong Kong rose 0.7 per cent and South Korea firmed by 0.3 per cent. The Hang Seng China Enterprises Index in Hong Kong gained 1.2 per cent.

A slew of share buybacks since June 9 has helped to prop up Genting Singapore, one of the most actively traded stocks yesterday. The casino operator jumped 2.7 per cent or 2.5 cents to 93.5 cents, with 39.1 million shares traded.

Noble Group was the most active counter. It fell 0.7 per cent or 0.5 cent to 71.5 cents, with 73.5 million shares traded. Noble yesterday engaged in a war of words with former Temasek senior managing director Michael Dee after he pressed its management to answer questions about the company.

Meanwhile, Singapore Airlines rebounded 1.3 per cent or 14 cents to $10.56 as concerns about effects of a possible spread of the Middle East respiratory syndrome appeared to be "overblown".

Market participants remain focused on the US Fed meeting early today (Singapore time) for clues to when the central bank could start raising interest rates.

"We noted that 80 per cent of the time, markets tend to rally when Federal Reserve chair Janet Yellen gives a press conference...

"I feel the Fed will take the June meeting as an opportunity to prepare the ground for a late rate hike (in the third or fourth quarter). This should support the consensus case for a September move," Mr Aw said.

gleong@sph.com.sg

A version of this article appeared in the print edition of The Straits Times on June 18, 2015, with the headline 'Bank counters lead charge in relief rally'. Print Edition | Subscribe