Bulls And Bears

STI ends lower on Wall Street correction

Lacklustre showing follows weak lead from US stocks after news of delay in tax cuts

Local shares ended the week on a limp note due in large part to Wall Street's correction on Thursday.

The downbeat mood sparked by disappointment that the much-awaited corporate tax cuts in the United States have been pushed to 2019 sent the Straits Times Index (STI) down 3.81 points or 0.1 per cent to 3,420.1.

But that did not take much shine off the STI's feat of five bumper trading sessions starting from Thursday last week that sent the index up 1.3 per cent.

The index is up nearly 19 per cent so far this year, and still ended this week ahead 38 points or 1.1 per cent.

The lacklustre showing yesterday followed the weak lead from US stocks.

The deep corporate tax cuts promised by President Donald Trump were long awaited by investors, so the news of a delay was a major letdown.

The anti-climatic news was reflected in other key Asian bourses. Japan's Nikkei 225 was down 0.8 per cent, Hong Kong's Hang Seng dipped 0.1 per cent, while South Korea's Kospi and Malaysia's KLCI both fell 0.3 per cent.

Market analysts also contend that after a strong rally, shares were ripe for a correction.

"The reaction in markets wasn't a surprise, given that investors have been pricing in a lot of good news and further pullback may continue for a couple of days or weeks, as many stocks look overbought at the moment," said FXTM chief market strategist Hussein Sayed.

CMC Markets Singapore analyst Margaret Yang Yan pointed out that daily turnover here has picked up in recent days, perhaps a sign that market participants are more active in share trading closer to the peak of the earnings season.

Oil prices are on the up with Brent crude having risen this year from a trough of US$44 a barrel in June to US$63 led by high demand, falling inventories and confidence that the Organisation of the Petroleum Exporting Countries will extend production cuts.

"While this pales in comparison to the drop from US$115 to US$45 over June 2014 to January 2015, in percentage growth terms, it is still a large rise of 43 per cent," said Nomura in a global market research report.

Turnover in the local bourse stood at 2.2 billion shares worth $1.3 billion, with losers outpacing gainers 236 to 206.

Noble Group reacted predictably, falling two cents or 7.4 per cent to 25 cents following a third-quarter net loss of US$1.17 billion, taking its losses for the year so far to US$3.05 billion.

Trading in Cosco Shipping International perked up with the stock jumping six cents or nearly 16 per cent to 44 cents with 55 million shares traded. The counter has gained more than 40 per cent since it announced the takeover of Singapore-listed logistics firm Cogent Holdings a week ago.

Yangzijiang Shipbuilding Holdings also rallied, gaining 7.5 cents or nearly 5 per cent to $1.64. It reported a three-fold jump in quarterly net profit on the back of a 13 per cent rise in revenue.

A version of this article appeared in the print edition of The Straits Times on November 11, 2017, with the headline 'STI ends lower on Wall Street correction'. Print Edition | Subscribe