Business

Feel-good sentiments lift local stock market

STI rises 0.7% to 3,512.18, inching closer to 2015's high; banking stalwarts lead gains in local bourse

There was no other way for the stock market to go but up yesterday with Wall Street's record close last Friday (despite underwhelming US jobs data), flourishing risk appetite and rosy macro data signalling global economic resilience.

The market's key Straits Times Index (STI) rose 22.73 points or 0.7 per cent to 3,512.18, inching closer to 2015's high, ahead of key data to be released in the later part of the week, chiefly US inflation and monthly data from China.

The US released disappointing non-farm payrolls for December but that did not detract from the big picture of robust job market conditions, including multi-year low unemployment rate. There are cautious voices, though.

"Although the (latest) numbers weren't bad, and the labour market remains healthy with unemployment at 4.1 per cent, wages are not yet showing signs of acceleration, and this remains the key missing ingredient of the US economy's recovery," Mr Hussein Sayed, FXTM's chief market strategist, pointed out.

But by and large, positive news is the dominating theme.

"It is a struggle to find anything bad to say. That has to be good," said ING's chief economist and research head of Asia-Pacific Rob Carnell, referring to the "distinct absence of bad news right now" in the financial markets.

There is no threat from the US Federal Reserve, while the European Central Bank's "casual saunter" towards a non-asset purchasing condition is well flagged and buoyant energy prices will support most of Asia.

However, he warned: "It only remains to say that with such a benign start to the year, something, somewhere will most likely go wrong... but in the meantime, we will enjoy the relative calm."

Other Asian markets also had a good run, with Hong Kong's Hang Seng up 0.3 per cent, China's Shanghai Composite rising 0.5 per cent, a 0.6 per cent gain for South Korea's Kospi and 0.8 per cent for Malaysia's KLCI.

The STI's strong close above the 3,500 levels, alongside sweet gains in other key regional bourses, has led analysts to opine that the upward momentum could continue right into the fourth-quarter reporting season.

Yesterday, some 1.9 billion shares worth $944 million were done, with 258 counters closing higher and 161 counters finishing lower.

Of the 30 STI stocks, 21 saw gains while four lost ground. The market's key barometer has climbed 3.2 per cent since the start of the year.

Credit Suisse, in its private banking research alert, said it preferred banks, developers and stocks with potential earnings upgrade.

"We expect cyclical stocks to lead the Singapore market (this year), as exports and manufacturing momentum stay firm and underpin a potential GDP growth pace of around 3 per cent," it said in the latest report.

Singapore's banking stalwarts led gains in the local bourse. DBS Bank advanced 13 cents or 0.5 per cent to $26.45, while United Overseas Bank rose 34 cents or 1.3 per cent to $27.25. OCBC Bank finished the day up by four cents or 0.3 per cent at $12.99.

Credit Suisse said it expects a stronger credit growth pick-up for Singapore banks due to a solid recovery in regional macroeconomic and falling credit costs. The banks, it added, are also potential beneficiaries of rising US interest rates and a turnaround in the domestic property market.

CapitaLand gained seven cents or nearly 2 per cent to $3.72. RHB Research has revised FY2018 and FY2019 earnings projections for CapitaLand given its recent divestments and acquisitions and the possibility of special dividends from divestment gains.

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