BullsAndBears

STI up on receding US yields, upbeat data here

Banking stocks underpin gains; key Asian markets also end higher

Wall Street's 1 per cent gain last Friday inspired investors here and across the region yesterday to start buying ahead of a key event later in the week - the first Capitol Hill appearance by new Fed boss Jerome Powell.

There were also local diversions as well with Singapore's manufacturing output staging a strong comeback last month after suffering its biggest decline in two years in December.

These left the benchmark Straits Times Index up 22.63 points, or 0.6 per cent, to 3,555.85.

Other key Asian markets edged higher too, with Japan's Nikkei 225 and China's Shanghai Composite gaining 1.2 per cent, while Hong Kong's Hang Seng and Australia's ASX 200 rose 0.7 per cent.

The gains on Wall Street last Friday were fuelled by improved sentiment following a pullback in United States Treasury yields. All eyes are on Federal Reserve chairman Powell's testimony to Congress.

The market will be watching for any signals on whether he will raise rates at a faster pace than last year, on the back of synchronised global growth recovery led by the US.

"With 10-year Treasury yields poised to burst through the 3 per cent rate any day now, stocks sensitive to any hint of looming aggression from the Fed, and the US dollar undecided whether it likes higher bond yields or higher stocks, Powell has a tough job on his hands when he gives testimony," said Mr Rob Carnell, ING's chief economist and research head for Asia-Pacific.

"We like the idea of a relatively tough-sounding speech - one that suggests he will not drag his heels on hiking rates, but with any luck, achieve his goals of price stability."

Turnover here came in at 1.7 billion shares worth $1.3 billion done with gainers outpacing losers 263 to 216.

Banking stocks underpinned the gains with DBS up four cents to $29.63, while United Overseas Bank rose 39 cents to $28.46. OCBC inched up 10 cents to $13.47.

Genting Singapore fell nine cents, or nearly 7 per cent, to $1.21. DBS put a "buy" rating on the counter yesterday, albeit with a target price of $1.49 versus $1.51 previously.

It noted that it believes the price rally is "not over", despite the stock's more than 45 per cent surge since August last year.

Sembcorp Industries slipped four cents to $3.20, while rigbuilder unit Sembcorp Marine fell five cents to $2.18. Last week, the company announced weak results that saw it sink into the red for the fourth quarter.

A version of this article appeared in the print edition of The Straits Times on February 27, 2018, with the headline 'STI up on receding US yields, upbeat data here'. Print Edition | Subscribe