The Dow Jones Industrial Average closed above 24,000 for the first time on Thursday while the Standard & Poor's 500 Index also reached a fresh record, as a United States tax reform plan moved closer to passage.
Many analysts believe there is still room for US stocks to rise, if the tax Bill becomes law.
The Bill has been making steady headway in Congress. The Senate, which has been seen as the more challenging branch of the legislature, voted on Wednesday to formally launch a debate on the Bill, which keeps it on track to potentially be signed by President Donald Trump by the end of the year.
"Tax talks ushered in broad-based gains for US equities with the news that a key Republican senator has aligned with the tax plan among others, shrugging off even negative developments on the politics end," said IG market strategist Pan Jingyi in a note yesterday.
"The dispelling of earlier speculations surrounding Senator John McCain's position had certainly been a boost for markets."
The positive lead from Wall Street could provide a continued boost to the Singapore market, which is also buoyed by strong corporate earnings.
A DBS analyst report on Monday noted: "The synchronised global recovery will continue to drive economic growth in this region. Singapore, an open and small economy, was an early beneficiary of this recovery since the end of 2016.
"We believe this turn is powerful, and will continue to drive a more sustainable earnings growth, going forward."
The improvement in Singapore's real economy will broaden from the manufacturing sector to the rest of the economy next year, while the U-shaped recovery in the services sector, which accounts for two-thirds of gross domestic product, is gaining strength, analysts noted.
DBS expects the STI to hit 3,688 by the end of the year, up 6.9 per cent from yesterday's close of 3,449.54.
UOB Kay Hian has a 2018 year-end target of 3,530 for the STI, but says it has room to reach as high as 3,730 if there are more earnings upgrades among listed companies.
"Our themes for the first half of 2018 include multi-year growth drivers, reflation picks, quality laggards and stocks with earnings surprises or specific catalysts," the analysts noted.
Meanwhile, Maybank Kim Eng analysts have a more modest forecast of 3,497 by the end of next year.
"Key downside risks to our outlook for the current rally to extend through 2018 are external growth and/or trade headwinds that derail industrial production and the tech capex upcycle, potential measures to cool the property market amid rebounding physical prices and en bloc activity and material portfolio fund outflows from Asean to North Asia."