Investors waver as oil wobbles

STI closes up just 0.6% amid murky economy outlook, mixed results of recovery in Asia

Singapore shares closed on a positive note on a mixed day for the region, but the local market is still hamstrung by the murky economic outlook and wobbly oil prices.

The benchmark Straits Times Index (STI) had a strong morning session, rising to 2,845 before noon but the afternoon trading was less certain, leaving the index up just 16.86 points or 0.6 per cent at 2,835.35.

The market has gone through a stretch of ups and downs between 2,820 and 2,880 since mid-March, when the STI recovered to the levels before the January crash. Market watchers expect more consolidation to set in in the near term.

"We maintain our view that STI's rally has stalled at 2,910, and the short-term trend has turned sideways in the weeks ahead," DBS analyst Yeo Kee Yan said, calling the next support level at 2,785, with resistance at 2,920.

Yesterday's session followed the 0.61 per cent rise to the Dow Jones Industrial Average last Friday, as Wall Street turned confident on the United States corporate earnings outlook after better-than-expected jobs and manufacturing data.

In Asia, the signs of recovery were less uniform. While China's manufacturing purchasing managers' index showed a surprise expansion in March, an equivalent survey in Japan showed a softer sentiment.

Bank of Singapore chief economist Richard Jerram believes China's issues still persist at a fundamental level. "Credit (in China) is still expanding at an excessive pace, which implies that the current growth model is not sustainable," he said in a note yesterday. "(Growth) needs to be derived from domestic productivity gains, rather than endless credit expansion."

In Singapore, some property blue chips did well. Global Logistic Properties added five cents or 2.58 per cent to $1.985, and City Developments closed up 24 cents or 2.94 per cent at $8.39. Ascendas Real Estate Investment Trust rose three cents or 1.26 per cent to $2.41.

Singapore Press Holdings gained one cent or 0.25 per cent to $4.04, OCBC rose two cents or 0.23 per cent to $8.84, and UOB put on seven cents or 0.37 per cent to $18.83. DBS was among the biggest losers yesterday, dropping four cents or 0.26 per cent to $15.17.

The banking sector remains under scrutiny following the move by Moody's last week to cut the ratings outlook for the three local banks to negative, amid persistent concerns on business headwinds and deteriorating credit quality.

Meanwhile, Keppel Corp had another bad day, closing down eight cents or 1.38 per cent at $5.70. Sembcorp Marine dropped two cents or 1.23 per cent to $1.605. This came as crude oil benchmark Brent stayed below US$39.

A version of this article appeared in the print edition of The Straits Times on April 05, 2016, with the headline 'Investors waver as oil wobbles'. Print Edition | Subscribe