BullsAndBears

S'pore shares rally on strong global growth

STI rises to its highest in over two years, with boost from banking stocks and Keppel shares

Singapore equities rallied ahead of US President Donald Trump's pick for the Federal Reserve chair, the Federal Open Market Committee (FOMC) meeting and the unveiling of United States tax plans, buoyed by optimism that global growth is strong.

The benchmark Straits Times Index (STI) yesterday added 17.53 points or 0.52 per cent to close at 3,391.61 - the highest in over two years. The gains recorded came from banking stocks and shares of Keppel Corporation, even as heavyweights including some of the Jardine group of companies chalked up losses.

Turnover came in at 2.5 billion shares worth $1.5 billion, which worked out to an average of $0.60 a share. Trading was firm with gainers outnumbering losers 305 to 158, excluding warrants.

The banking counters of OCBC, DBS and UOB added a combined nine points to the index. OCBC shares closed up four cents at $11.94, following better-than-expected third-quarter earnings. UOB and DBS will report Q3 results tomorrow and on Nov 6 respectively.

Among the actives was Sembcorp Marine, whose stock gained eight cents to end at $2.01. The company returned to profitability in the third quarter with a net gain of $2.72 million, a reversal from a loss of $21.79 million for the year-ago period, despite a tough operating environment in the offshore and marine sector.

The STI's advances followed an earlier fresh high on Wall Street that was led by solid US economic data, rising oil prices and a series of strong earnings reports.

Mr Philip Wee, strategist at DBS Group Research, said the US dollar is likely to find support from Wednesday's FOMC meeting affirming a Fed hike this December.

"The DXY (US dollar) index corrected lower on Monday on news that Fed governor Jerome Powell was ahead of John Taylor in the race to replace Janet Yellen as Fed chair next year. This brought the US 10-year treasury yield down to 2.38 per cent on Tuesday from last week's high of 2.46 per cent. The DXY was, however, reluctant to extend its downside below 94.50 on Tuesday."

Mr Wee added that investors could possibly shrug off the pick of Fed chair as they turn their attention to the potentially strong US jobs report to come tomorrow.

US non-farm payrolls are expected to rebound to 200,000-300,000 for October after the previous month's negative 33,000 reading, he said.

Investors' upbeat mood also spread through the region with Tokyo's Nikkei closing higher, Seoul's Kospi ending the day at a record high, Australian shares finishing near a six-month high and Hong Kong's Hang Seng advancing. New Zealand shares bucked the trend, slipping 1.1 per cent - the biggest drop for the index since March.

A version of this article appeared in the print edition of The Straits Times on November 02, 2017, with the headline 'S'pore shares rally on strong global growth'. Print Edition | Subscribe