Bulls And Bears

STI ends higher amid respite from trade fears

Regional markets rally on hopes of rate cuts, delayed US tariffs on Mexico

Local shares ended the week on a buoyant note yesterday after investors rediscovered their appetite for risk.

The mood was lifted by hopes that the United States could delay its plans to hit Mexico with tariffs, as well as expectations that central banks will cut rates.

"It was a day of temporary relief with regard to trade tensions. This saw technology and consumer cyclical sectors leading the charge for markets, which should not come as a surprise," IG market strategist Pan Jingyi said.

The Straits Times Index (STI) closed up 20.11 points, or 0.6 per cent, to 3,166.29. It advanced 48.53 points, or 1.6 per cent, for the week - its first such gain in five weeks.

Australia, Japan and Malaysia also ended higher. China, Hong Kong and Indonesia markets were closed.

CMC Markets analyst Margaret Yang noted that regional markets were enjoying a technical rebound following a sell-off last month, "but the sustainability of this rally must be accompanied by improving fundamentals, otherwise it would be groundless".

With several markets out of action due to holidays, trading volume here was lower with just 544.66 million shares - less than half of the daily average in the first four months of the year - changing hands on turnover of $801.75 million.

Gainers trumped losers 209 to 134, while just seven of the STI's 30 components ended in the red.

Genting Singapore, which closed unchanged at 86.5 cents, was the benchmark's most traded stock, with 24.9 million shares traded.

The banks reversed Thursday's losses. DBS Bank added 0.6 per cent to $24.39, OCBC Bank gained 0.7 per cent to $10.64 and UOB rose 1.1 per cent to $24.23.

Interest in real estate investment trusts (Reits) surged on Thursday as investors took up positions on hopes of a rate cut by the US Federal Reserve, but many Reits counters sank back yesterday amid profit-taking.

Frasers Centrepoint Trust closed 3.1 per cent lower at $2.52 while CapitaLand Mall Trust fell 0.8 per cent to $2.55.

The Singapore Government's decision to curb land supply for the second half of the year put the spotlight on property developers yesterday.

City Developments rose 1.9 per cent to $8.47 and CapitaLand advanced 1.9 per cent to $3.27.

UOB Kay Hian trading representative Brandon Leu noted that investors also shifted from Reits to property developers - which, he said, benefited from a more conducive interest rate outlook.

A version of this article appeared in the print edition of The Straits Times on June 08, 2019, with the headline 'STI ends higher amid respite from trade fears'. Print Edition | Subscribe