Bulls and Bears

Hope of STI rising dashed amid US coronavirus news

Index mostly up until states of emergency declared in California and Washington

Local shares looked set for another positive showing yesterday, but the states of emergency declared in California and Washington due to the coronavirus outbreak derailed that idea.

The Straits Times Index (STI) was up for most for the session until the news from the United States caused futures on Wall Street to fall further while Europe dipped. The STI closed 6.76 points, or 0.2 per cent, lower at 3,018.27.

Sentiment in the local market had been improving due to monetary and fiscal stimulus measures by the authorities to mitigate the economic impact of Covid-19.

Elsewhere, most equity benchmarks were higher, due in part to them closing before sentiment dipped. Australia, China, Hong Kong, Japan, Malaysia, South Korea and Taiwan all finished higher.

"I honestly thought risk would trade much better today, but with the lack of any supportive news flows in Asia, investor sentiment wobbles," said AxiCorp chief market strategist Stephen Innes.

"Markets become easily influenced by the dominant narrative in the media cycle, where Covid-19 fears and (US) Fed rate cut scepticism rule the roost."

Trading volume here came in at 1.74 billion shares worth $2.08 billion, with gainers exceeding losers 237 to 214.

Real estate investment trusts (Reits) continued to see strong interest among traders after their record day on Wednesday.

Ascendas Reit led the way, jumping 3.6 per cent to $3.45, its highest close since listing in November 2002. Meanwhile, CapitaLand Mall Trust closed 2.9 per cent higher at $2.53, and Mapletree Commercial Trust added 2.7 per cent to $2.30.

They figured among the STI's five most active counters of the day.

While Reits continued to climb, the banks extended their declines.

The local lenders were among the STI's main laggards as investors anticipate other central banks taking cues from the US Federal Reserve in lowering borrowing rates.

OCBC Bank lost 1.2 per cent to $10.42, United Overseas Bank dipped 1.1 per cent to $23.74, and DBS Group Holdings fell 1.3 per cent to $23.60. The declines have made bank shares attractive for some.

Among second-line listings, Amara Holdings closed flat at 39.5 cents. RHB Research sees value in the developer even though its earnings are likely to be hit by Covid-19.

Global index leader FTSE Russell yesterday said that there will be no changes to the constituents of the STI, following the latest review.

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A version of this article appeared in the print edition of The Straits Times on March 06, 2020, with the headline Hope of STI rising dashed amid US coronavirus news. Subscribe