A sharp rally in banking counters yesterday propelled the Straits Times Index (STI) to its highest level since August 2015 - making Singapore the best regional performer so far this year.
The local benchmark jumped 26.7 points, or 0.83 per cent, to 3,237.81.
The run-up was due largely to a continued rally in DBS Group Holdings, which surged 97 cents, or 4.9 per cent, to $20.83, before shareholders are no longer entitled to receive the latest dividend as of today.
On Tuesday, Singapore's largest lender posted unexpectedly robust first-quarter earnings, extending bullishness over banks after United Overseas Bank (UOB) also posted above-forecast earnings last Friday.
The upbeat mood has also been fuelled by a slew of upgrades by research analysts on DBS and UOB this week, and signs that bad loan stress from the oil and gas sector is abating.
UOB gained 1.93 per cent, or 44 cents, to $23.24 yesterday, while OCBC climbed 2 per cent, or 20 cents, to $10.18.
Singapore has outperformed the rest of Asia in the year to date, with an eye-popping 12.39 per cent gain - although it has yet to recover to its pre-Asian financial crisis high of 3,831.19 on Oct 11, 2007.
Hong Kong is second, with a 12.25 per cent gain.
Malaysia has gained 7.97 per cent so far this year; and Jakarta is up 6.62 per cent.
Another factor helping sentiment is cautious optimism that the positive corporate earnings trend may continue for the rest of the first-quarter results season.
The local market was fairly active, with 1.54 billion shares worth $1.22 billion traded in total, even though investors are cautious ahead of the US Federal Reserve's policy statement due early today Singapore time, and the release of key US job data tomorrow.
The Fed is not expected to lift interest rates, with a hike expected only next month.
Tokyo, Hong Kong and Seoul were closed for public holidays yesterday.
"With expectations high for an Emmanuel Macron victory in the second round of the French presidential election, equity and currency markets may not see a repeat of the positive first-round reaction, while a victory for Marine Le Pen will certainly unsettle the market," DBS Group Research said.