Markets Insight

Local investors to look to Wall Street for cues

Attention will be on Trump's first address to Congress for more details on economic plans

Market sentiment in Singapore this week will be driven largely by whether red hot Wall Street can sustain its recent record-setting rally.

US traders have been putting big money on the table amid promises of major fiscal spending by the administration. All eyes will be on President Donald Trump's first address to Congress tomorrow for further details on his economic plans.

The optimism drove the Dow Jones Industrial Average to fresh highs over the past 11 sessions as it climbed 0.05 per cent on Friday.

The last time the benchmark index had seen a winning streak this long was back in 1987.

"The optimism in the United States is likely to remain buoyed, with expectations for an upward revision for the economy's fourth- quarter GDP. This could create positive leads for the Singapore market," IG market strategist Jingyi Pan told The Straits Times.

Attention will also be on Federal Reserve members, notably chairman Janet Yellen, who are set to speak at the end of the week before the US central bank makes its next interest rate decision.

Closer to home, China's manufacturing data will be closely monitored as well, said Ms Pan, although she noted that its purchasing managers' index numbers for February, out on Wednesday, are expected to moderate, "so we may find little inspiration for the Singapore market".

The benchmark Straits Times Index (STI) eased 20.54 points or 0.65 per cent to 3,117.03 on Friday. However, it had racked up strong gains mid-week, which still left the index 9.38 points or 0.3 per cent higher for the week.

Besides the Budget announcement last Monday, which left the market mostly "underwhelmed", traders continued to digest more earnings reports.

These included Sembcorp Industries, which posted a surge in fourth-quarter net profit to $147.5 million, from $60.8 million, thanks to a profitability turnaround in its marine business and a better showing from the urban development division. It finished at $3.27 on Friday, up 2.5 per cent for the week.

Commodity trader Noble Group came under the spotlight on Friday after Iceberg Research released a new report criticising the firm's recently announced efforts to look for a strategic investor. The stock plunged 4.5 cents or 16.7 per cent to 22.5 cents in heavy trade.

Meanwhile, a Bloomberg report said the Singapore Exchange (SGX) is considering reinstating the midday intermission, and will hold a public consultation on the issue in the coming weeks.

The report also quoted sources as saying the SGX will propose a test that would widen the price increment at which shares are quoted in a bid to bring day traders back.

The daily average value of shares traded on the local bourse this year so far has grown 6.4 per cent to US$809 million (S$1.1 billion), compared with the average last year, according to Bloomberg data.

But this is still down from the US$1.12 billion daily average in 2013.

A version of this article appeared in the print edition of The Straits Times on February 27, 2017, with the headline 'Local investors to look to Wall Street for cues'. Print Edition | Subscribe