STI reverses two-day streak of losses despite US inflation fears

Local shares halted a two-day losing streak yesterday but not without a struggle, following a negative cue from Wall Street overnight and increasing inflation fears.

Investors had just enough buying power to lift the Straits Times Index 6.75 points or 0.21 per cent to 3,238.07, on trade of 1.41 billion shares worth $1.15 billion with gainers outpacing losers 263 to 194.

Regional peers closed mixed, with gauges in Japan, Hong Kong and China posting gains while Malaysia, Australia, South Korea and Taiwan ended lower.

United States consumer price data for last month came in hotter than expected, with a broad-based rise in prices across all main categories, chiefly in transport-related, energy, food and housing. This followed higher consumer price and factory-gate prices in China.

"Inflation ticks up in both US and China - and that's a tricky combo," said OCBC Bank's Wellian Wiranto. "As producers deal with greater cost pressure, margins would be the first to suffer, but eventually, they will be forced to pass the burden on to consumers.

"China is the world's largest exporter, commanding over 15 per cent of global exports. Hence, any price pass-through from there will add to global inflation concerns.

"For Asean economies - to whom China is the biggest exporter by miles - that introduces a potentially nasty risk of imported inflation."

Back on the home front, Geo Energy Resources slipped 1.47 per cent to 33.5 cents.

The Indonesian coal producer posted record third-quarter profits and revenue on the back of a surge in prices to a historic high amid a supply crunch and overwhelming demand. It declared an interim dividend of three cents per share for the third quarter.

It was also the day's fourth most active, with 37 million shares changing hands.

AEM Holdings outperformed the STI, climbing 4.54 per cent to $4.38. The electronic services provider reported a 4.3 per cent fall in third-quarter net profit to $23.3 million from a year earlier.