Shares rally on positive Wall Street lead, STI closes 2 points higher

SINGAPORE - Singapore shares rallied on a positive lead from Wall Street on Monday, as expectations of a US interest rate hike this year are ebbing after the latest softer-than-expected United States employment data.

The benchmark Straits Times Index jumped 2.08 per cent or 58.10 points to 2,851.25, led by banking counters DBS, which jumped 2.4 per cent or 38 cents to $16.51 and OCBC rose 2.1 per cent or 18 cents to $8.95. UOB gained 1.6 per cent or 30 cents to $18.58, while Singtel climbed 2.8 per cent or 10 cents to $3.66.

"We think it is too soon to call an end to the equity bull-market," Citi Research analyst Mark Schofield said. "Timing is crucial, but we believe that there will be selective buying opportunities coming out of the recent moves.

Bourses also rallied in most of Asia, except for Chinese markets which are closed until Thursday for the Golden Week. Hong Kong rose 1.6 per cent, Japan was up 1.6 per cent, Indonesia jumped 3.2 per cent and Thailand, up 1.3 per cent.

Whether the rally in equities is sustainable will depend on how well US companies perform, given a weakening China and a strong US dollar, in the upcoming third-quarter earnings season, which begins this week, remisiers said.

Meanwhile, traders are watching for further signals on rates from the upcoming FOMC meeting on Oct 27-28, as well as nonfarm payroll and inflation data in October and November.

"The question is whether the weakness in US jobs data is a temporary blip or will it continue. If nonfarm payrolls pick up in October and November, then a December rate hike is still on the cards. But if it continues to soften, then the rate hike is likely to be pushed to the first quarter," remisier Alvin Yong said.

The most actively traded stock yesterday was New Wave Holdings, which is flat at 1.2 cents with 89.4 million shares traded. This after Fragrance Group founder and owner Koh Wee Meng picked up 38.6 million shares at 0.9 cent to 1.1 cents a share last week. That brought his direct interest to 8.8 per cent from 6.1 per cent.

Other penny plays include Stratech Group, which climbed nearly 12 per cent or 0.5 cent to 4.7 cents, with 68.6 million shares traded. Golden Agri-Resources gained 4.5 per cent or 1.5 cents to 35 cents, with 53.6 million shares traded, while Spackman Entertainment Group fell 6.8 per cent or 0.4 cent to 5.5 cents, with 53.6 million shares traded.