STI drifts down ahead of US jobs data release

June figures, issued before Fed meet, will impact interest rates and US$: Experts

Local shares were treading water yesterday while investors awaited the release of United States jobs figures that could signal where interest rates are headed.

The state of limbo left the Straits Times Index (STI) rudderless as it drifted down 5.44 points or 0.16 per cent to 3,366.81, but it was up 1.4 per cent for the week.

Australia, China, Japan and South Korea closed higher, while Hong Kong and Malaysia ended lower.

Vanguard Markets managing partner Stephen Innes noted that investors were looking to the US jobs figures for June - the last employment data release before the Federal Reserve's meeting on interest rates this month.

CMC Markets analyst Margaret Yang said that if the numbers were poor, there would be a stronger case for rates coming down. But if "jobs data beats expectations and is on the upside... the reverse is likely to happen and the US dollar may jump".

Trading volumes here clocked in at 1.34 billion shares worth $1.23 billion, with gainers pipping losers 219 to 204, while 12 of the STI's 30 components were in the red.

Financials underperformed.

DBS dropped 1.7 per cent to $25.63, UOB was 0.8 per cent lower at $26.26 while OCBC ended at $11.39, down 0.9 per cent.

Thai Beverage was the STI's most active, closing 3.6 per cent higher at 86.5 cents on trade of 58.2 million.

Much of the activity was down to interest in the counter after reports suggested that ThaiBev could be a potential partner of brewer Anheuser-Busch InBev's Asia-Pacific business.

The brewer is seeking to raise up to US$9.8 billion (S$13.3 billion) in Hong Kong for its regional business, which would make it the year's largest initial public offering globally.

Casino operator Genting Singapore clawed back some lost ground, rising 1.1 per cent to 91.5 cents.

SIA Engineering extended strong gains from Thursday's session on the possibility of privatisation by parent firm Singapore Airlines.

DBS Equity Research analysts upgraded their recommendation on the aircraft maintenance, repair and overhaul services company to "buy" with a target price of $3.01.

Should a privatisation attempt surface, analysts Paul Yong and Suvro Sarkar said the offer price would carry a premium of "around 10 to 30 per cent above the last closing price. This would translate to an offer price of between $2.75 and $3.26 per share". SIA Engineering closed 6.25 per cent up at $2.89 on 11 million shares traded.

A version of this article appeared in the print edition of The Straits Times on July 06, 2019, with the headline 'STI drifts down ahead of US jobs data release'. Print Edition | Subscribe