Local shares were treading water yesterday as traders mulled over the implications of resurgent Covid-19 cases in the United States and Beijing, and decided they were not entirely convinced all the bad news has been priced in.
The Straits Times Index (STI) finished 3.96 points, or 0.15 per cent, lower at 2,665.66. Losers pipped gainers 198 to 195, with 1.41 billion shares worth $1.18 billion traded.
Catalist-listed Medtecs International, which makes consumables like patient apparels, disposable surgical masks, surgical gowns and bed linen, was the most actively traded. It surged 16.36 per cent to 32 cents on a volume of 106.3 million.
Top gainer Jardine Matheson rose 3.03 per cent to US$44.56, while top loser Great Eastern fell 0.89 per cent to $20.04.
STI constituent Venture Corporation rose for a third straight day, closing 2.73 per cent higher at $16.16.
Citi analyst Patrick Yau noted this week that the electronics manufacturing services firm should see a rise in contributions from its medical products and life sciences division in the second half of the year. Citi has a 12-month target price of $17.51.
Singapore Airlines fell 1.45 per cent to $4.07 after UOB Kay Hian analyst K. Ajith downgraded the airline to "sell" from "buy" and lowered his target price from $4.35 to $3.80, citing uncertainty over the extent of the decline in traffic and load factors and consequently the extent of cash burn.
Regional markets reflected some profit-taking. The KLSE fell 1.40 per cent, the Nikkei dipped 0.45 per cent, the Hang Seng was down 0.07 per cent while the Shanghai Composite rose 0.12 per cent.
OCBC Research said in its daily market outlook: "The smell of trade friction is in the air, as the US pulled out of international talks over a new digital tax framework for tech companies. (Treasury Secretary) Steven Mnuchin made the decision after failing to reach an agreement with countries looking to place levies on the revenue of American firms. European countries need to be wary of retaliatory measures if they press ahead with their own taxes."
There is a growing sense that traders may have got ahead of themselves and observers warn that markets could be in line for a pullback unless there is a major event to move higher, such as the development of a vaccine for Covid-19.
"The market is searching for a new catalyst," said Mr Sameer Samana of Wells Fargo Investment Institute. "The narrative around policy stimulus and better economic data seems to be losing its sway."
• Additional reporting by Agence France-Presse
