Bulls And Bears

Banking, consumer staples weigh on STI

Index slips on lack of news from US; regional markets glum apart from Tokyo

Some were calling it "Super Thursday" but traders here were unmoved by the hype surrounding news - or the lack of it - from the United States.

The US tax reform package didn't materialise, nor did confirmation of the next Federal Reserve head.

Investors responded by sending the benchmark Straits Times Index (STI) down 11.11 points or 0.33 per cent to 3,380.50, with financial and consumer staple stocks the main culprits. Turnover came in at 2.3 billion shares worth $1.1 billion, with losers beating gainers 285 to 170.

OCBC fell 14 cents to $11.80, UOB fell seven cents to $24.79 while DBS edged up one cent to $23.

Thai Beverage, which recently acquired a 75 per cent stake in Myanmar Supply Chain and Marketing Services and Myanmar Distillery, lost one cent to 97 cents.

Artivision Tech remained on the actives list after surging on Wednesday on news of a proposed acquisition that may lead to a reverse takeover and entry into the fast-growing fintech business. The stock closed unchanged at $0.021 on a volume of 74 million units. Energy stocks including Magnus Energy, Charisma Energy and KrisEnergy were also actively traded as oil prices rose.

Across the region, the Hong Kong, Shanghai, Malaysian, Korean and Australian indices ended their day on a glum note, save for Tokyo, which hit a 21-year high.

There were no surprises at yesterday's US Federal Open Market Committee meeting. Interest rates were kept on hold but there were indications of a rise next month.

CMC analyst Margaret Yang also noted that markets were not expecting any surprise from the Bank of England - widely expected to raise interest rates for the first time in nearly a decade. She said the fast depreciation in sterling has sent the country's inflation rate to 3 per cent and the economy has shown signs of solid growth recently.

"However, a 25-basis-point rate hike has largely been priced in already. Therefore, the Bank of England needs to promise further rate hikes in 2018 in order to give the pound and treasury yield a boost," said Ms Yang. "Otherwise, a dovish-biased statement could send sterling lower tonight."

Investors would like the certainty of knowing that Fed governor Jerome Powell will replace Dr Janet Yellen as the new Fed chair. It has been reported that the White House had notified Mr Powell that he would be the nominee.

Japanese Prime Minister Shinzo Abe raised some eyebrows when he described the appointment of the Bank of Japan's governor as a "blank slate", in turn throwing uncertainty into the future of current governor Haruhiko Kuroda, whose term ends next October.

Mr Rob Carnell, ING's head of research in Asia, said Mr Abe's remark is not exactly a ringing endorsement even though Mr Kuroda remains the market's top pick.

A version of this article appeared in the print edition of The Straits Times on November 03, 2017, with the headline 'Banking, consumer staples weigh on STI'. Print Edition | Subscribe