LOCAL shares retreated yesterday, in line with a late sell-off in the jittery Chinese markets. The Straits Times Index slid 34.48 points, or 1.05 per cent, to 3,249.52, reversing Wednesday's gain.
"Singapore equities have more or less moved in line with Chinese markets since October last year, but the correlation seemed stronger in July," noted IG market strategist Bernard Aw, adding that many traders here have exposure to Chinese equities.
The sell-off was sparked by the Shanghai market's 2.2 per cent fall yesterday, which came after the index had suffered its heaviest one-day loss in more than eight years on Monday. The fears spilt over into Hong Kong, where the Hang Seng Index fell 0.49 per cent.
Losses here were led by commodities blue chip Noble Group, which dived seven cents or 11.86 per cent to 52 cents, its lowest since late 2008.
Singapore Airlines (SIA) dropped 54 cents, or 4.73 per cent, to $10.88, even as it turned in a 162 per cent surge in net profit for the first quarter on Wednesday. Its net profit for the three months to June 30 was up year-on-year to $91 million. A CIMB report maintained an "add" call on the stock, as it expects SIA to post better results in this half, "after it uses up most of its expensive legacy fuel hedges" in the first.
Telco Singtel, which announced before trading that it has sold its 30 per cent stake in travel service marketing and distribution firm Abacus Travel Systems for US$3 million (S$4.1 million), dropped 16 cents or 3.75 per cent to $4.11. The stock was traded ex-dividend - buyers will not get the next dividend payout.
Agri-businesses Olam International and Wilmar International were among the few gainers for the day despite the commodities rout. Olam climbed 2.5 cents or 1.4 per cent to $1.815, while Wilmar added four cents or 1.25 per cent to $3.23.
Singapore Post continued to gain after posting good first-quarter results on Tuesday, rising 2.5 cents or 1.3 per cent to $1.945. Airport solutions provider Stratech Group was again the most actively traded stock, with 172 million shares changing hands. The counter rose 0.2 cent or 3.57 per cent to 5.8 cents.
In all, about 2.09 billion shares worth $1.08 billion were traded.
Elsewhere, Japan rose 1.08 per cent, riding on confidence from strong corporate earnings and the United States Federal Reserve's upbeat assessment of the US economy. The Fed took a rain check on the interest rate hike as the Federal Open Market Committee meeting concluded, saying it will raise rates once it sees a sustained recovery.
This lifted sentiment on Wall Street and sent the Dow Jones Industrial Average up 0.69 per cent.
"The Fed is taking baby steps towards a rate hike," Mr Brian Jacobsen, chief portfolio strategist at Wells Fargo Funds Management, told Reuters. "The Fed is doing a good job getting people ready for a rate hike before year's end, making it likely to be a low-impact event."