A surprise move by the Bank of Japan (BOJ) to cut a benchmark interest rate below zero sparked what traders hope is the beginning of a Chinese New Year rally after the year's brutal start.
The Straits Times Index rallied 2.6 per cent or 66.66 points to 2,629.11, leaving it up 2 per cent for the week.
Gains in banking counters helped lift the index: DBS jumped 3.8 per cent or 52 cents to $14.06, OCBC rose 3.8 per cent or 29 cents to $7.92 and UOB gained nearly 3 per cent or 52 cents to $18.09.
"This represents a beacon of hope for stocks. Most of us were surprised because we were expecting the BOJ to do nothing," remisier Alvin Yong said. "The STI overcame resistance at 2,600, but whether the rally is sustainable will depend on whether the (US Federal Reserve) will hike rates again in March or delay it, and what the (European Central Bank) will do."
Market watchers feel the BOJ's move will force the US to reduce the pace of any rate rises this year.
Market confidence was quite strong for a Friday, when traders typically close off positions ahead of the weekend, Mr Yong said.
"But the strong closing of the STI heavyweights points to traders' confidence in holding their positions over the weekend," he said.
Keppel Corp jumped 5.2 per cent or 25 cents to $5.02, Sembcorp Industries surged 12.6 per cent or 28 cents to $2.51, CapitaLand rose 3.4 per cent or 10 cents to $3.07 and HongKong Land gained 2.6 per cent or 16 cents to $6.27.
OCBC Investment Research said in a report yesterday that there may be more talk of potential capital raising by Keppel, Sembcorp Industries and Sembcorp Marine should the outlook for the sector deteriorate further.
"Singapore wants to nurture globally competitive companies - we expect Temasek to lend its support to either Keppel or SembMarine should there be a need for more funds," OCBC analyst Low Pei Han said.
Noble Group was again the most hotly traded stock after it secured shareholder approval to sell its 49 per cent stake in Noble Agri to Cofco. The commodity trader surged nearly 15 per cent or four cents to 31 cents, with 92.8 million shares traded. "If there are no further hiccups in the sale, that may lead to a restoration in its credit rating," Mr Yong said.
Higher crude prices helped fuel oil- and shipping-related plays. Ezra Holdings jumped 5.6 per cent or 0.3 cent to 5.7 cents, with 54.4 million shares traded, while Rex gained 2.8 per cent or 0.2 cent to 7.4 cents with 34.4 million shares traded.
Global Logistic Properties was also active, rising 1.2 per cent or two cents to $1.69, with 47.3 million shares traded, while Golden Agri-Resources jumped 5.7 per cent or two cents to 37 cents, with 30.7 million shares changing hands.