Markets Insights

Quiet week likely ahead of New Year

Shanghai, which was open on Christmas, added 0.4 per cent amid speculation that the government will step up its efforts to stem an economic slowdown.
Shanghai, which was open on Christmas, added 0.4 per cent amid speculation that the government will step up its efforts to stem an economic slowdown.PHOTO: REUTERS

1.4% slide in China's industrial profits will dampen mood but traders look to fresh start after tough year

Regional markets look set for a quiet, more sober week, after last week logged one of their best showings this year, albeit on thin trading.

A slight recovery in oil prices off historic lows and holiday cheer helped with the pre-Christmas lift.

But the latest grim data from China yesterday will set a more sombre tone - industrial profits slid 1.4 per cent last month, the sixth straight month of decline.

Last week, Singapore's benchmark Straits Times Index fared well, rising 13.97 points, or 0.49 per cent, to 2,877.62 on Thursday in a half-day's trade, contributing to a 0.87 per cent gain for the week.

Some notable movements in the market - which reopens today after being shut last Friday for Christmas - included that of postal and e-commerce group Singapore Post, which tumbled five cents, or 3 per cent, to $1.61, its lowest since June last year.

This was after concerns were raised over a special corporate governance audit it will be undertaking.

Commodity giant Noble Group dropped half a cent, or 1.1 per cent, to 45.5 cents, reversing its earlier gains.

Last week, the firm sold its remaining 49 per cent in its agriculture unit to China's Cofco Corp for at least US$750 million (S$1.06 billion). Elsewhere in the region, Hong Kong gained 0.7 per cent last Thursday in shortened trade, while Sydney jumped 1.3 per cent.

Shanghai, which was open on Christmas, added 0.4 per cent amid speculation that the government will step up its efforts to further stem an economic slowdown.

But Tokyo ended lower for the fifth straight week, led by exporters as it slid 0.4 per cent.

Over in the United States, Wall Street retreated 0.3 per cent last Thursday, dragged by a drop in energy stocks.

Still, the Dow Jones Industrial Index put on about 2.5 per cent for the shortened week, buoyed by a rebound in crude prices, which earlier hit 11-year lows, posting its best weekly performance since Nov 20.

The Standard & Poor's 500 Index rose 2.8 per cent, recouping most of its losses since the Federal Reserve on Dec 16 raised interest rates for the first time in almost a decade.

Ms Mariann Montagne, who helps oversee US$870 million as senior investment analyst at Gradient Investments Group, told Bloomberg: "We've seen some increases in the price of oil, so people are maybe a little more interested in putting money to work at these prices."

She added: "The Fed hike really told us that things are improving and that the economy can support a rate hike."

Analysts said the week ahead could be another quiet one as markets prepare to usher in the New Year. Traders are likely looking forward to making a fresh start after the tough year.

Mr Giri Cherukuri, head trader at OakBrook Investments, which oversees US$1.3 billion in Illinois, said in a Reuters report: "The consensus is that the Fed is going to raise rates pretty slowly and that the economy will be able to absorb those rate hikes... So the first thing next year will be to track the path of that economic growth."

A version of this article appeared in the print edition of The Straits Times on December 28, 2015, with the headline 'Quiet week likely ahead of New Year'. Print Edition | Subscribe