Investor confidence returned on the back of a buoyant Wall Street and talk of more Chinese stimulus, sending local shares surging yesterday.
The key Straits Times Index (STI) soared 72.43 points, or 2.52 per cent, to 2,945.43, as bargain hunters piled into blue chips.
Banking counters led the charge, with OCBC Bank rising 3.2 per cent or 28 cents to $9.17, DBS Bank up 2.5 per cent or 44 cents to $18.09, and United Overseas Bank adding 2 per cent, or 39 cents, to $19.75.
Jardine Matheson was another winner, gaining 4.8 per cent or US$2.24 (S$3.10) to US$48.75.
"Those who had dared to buy since Black Monday would have made good profit (yesterday). Those who had wanted to sell and hold cash changed their minds when sentiment changed (yesterday). But we cautioned them to pace their bargain hunting," said remisier Alvin Yong.
But he cautioned that to convincingly break the downtrend, the STI has to close above 3,000 points with strong volume.
IG market strategist Bernard Aw said: "As long as the markets in the US and China continue to improve in the coming days, we should also see a nice recovery in Singapore."
Elsewhere, Shanghai jumped 5.4 per cent, after China announced that it injected 140 billion yuan (S$31 billion) via a short-term liquidity operation and would further cut benchmark interest rates and reserve requirement ratios.
Hopes that stamp duties on stock trading will fall led to sharp gains in Chinese financial-related stocks, including banks and insurers.
The markets were also cheered by credible talk that a much-anticipated September rate hike in the United States could be delayed by the market turmoil. Traders are on the lookout for further signals from the Jackson Hole economic summit. A better-than-expected official US manufacturing report showing orders for durable goods rose 2 per cent last month added to the optimism.
Meanwhile, Olam International shot up 13.4 per cent or 22.5 cents to $1.91 yesterday before the company called for a trading halt. No further details were provided.
Fellow commodity trader Noble Group soared 14.4 per cent or 6.5 cents to 51.5 cents, with 137.4 million shares traded. It was the most actively traded, fuelled by speculation that Olam's announcement may benefit Noble as well, Mr Aw said.
Investors also targeted software solutions provider Silverlake Axis, which jumped 19.6 per cent or nine cents to 55 cents, with 61 million shares traded. RHB Group upgraded its call to buy, saying Silverlake's management has refuted all adverse allegations in a short-seller's report that took issue with certain related-party transactions.