STI extends previous day’s gains, finishes up 0.9%

SINGAPORE - Singapore shares rose on Tuesday, extending the previous day’s gains and taking its cue from overnight gains in Wall Street, as contagion worries over recent banking woes in the United States and Europe appeared to have subsided. Even so, investors’ angst over inflationary pressures continued to persist.

The key Straits Times Index (STI) finished the day up 30.04 points, or 0.9 per cent, at 3,311.12. Elsewhere, most key gauges across the region posted gains, although those in Hong Kong and Malaysia dipped.

The

failures of Silicon Valley Bank

and Signature Bank in the US, and

Credit Suisse in Europe,

have triggered concerns over a potential broader systemic risk, as well as over their implications on global growth and interest rate trajectory. For now, investors seem reassured by the prompt actions by regulators in terms of contagion impact, although those worries are likely to remain at the back of their minds.

A fresh risk to inflation outlook has emerged following the surprise move by oil cartel Opec+ to slash output, which was perceived as being prompted by a slowing macro economy. The latest decision may keep crude oil prices elevated, which could, in turn, potentially pile on pricing pressures. This could offset recent cheer over the decline in core inflation in many parts of the world.

Phillip Nova, in a research report, said: “The production cuts announced by Opec+, much cheered by oil bulls, have complicated the inflation outlook even further, and added to the headwinds faced by risky assets and equities.

“Markets that hoped the Federal Reserve would pivot soon have started to re-evaluate the possibilities of a stretched period of rate hikes. Additionally, the softer manufacturing activity data points to the possibility of the US economy heading into a recession.”

It added: “Going ahead, investors are likely to evaluate economic indicators coupled with a heavy dose of earnings, while US jobless claims and the health of the labour market will help project the Fed’s future rate path.”

Turnover on the local bourse stood at two billion units worth $1.3 billion, with 350 counters up and 248 down. Gains were led by Singapore’s banking trio DBS, OCBC and UOB, as well as Sembcorp Marine and Singtel.

Transport giant ComfortDelGro shares rose one cent, or 0.8 per cent, to $1.21 on Tuesday. RHB Research said the company is poised to benefit from rising demand for its public transport and taxi services in the second half of 2023. It cited higher tourist arrivals as another major boost for a strong increase in ridership.

The house has a “buy” rating on ComfortDelGro shares, with a target price of $1.40.

Mapletree Logistics Trust (MLT) inched up three cents, or 1.7 per cent, to $1.78. MLT recently announced a deal to acquire eight logistics assets in Japan, South Korea and Australia, and is in talks for further property acquisitions and divestments in Greater China to ramp up its regional footprint.

THE BUSINESS TIMES