Business

Market mixed ahead of Yellen report

STI eases 9.89 points; in the broader market, gainers beat losers by a narrow 210-208

Investors held their breath mid-week as they searched for signs on when the US Federal Reserve would start reducing its massive balance sheet ahead of Fed chief Janet Yellen's two-day semi-annual monetary policy testimony beginning last night (US time).

The pause meant the benchmark Straits Times Index (STI) extended its losses for a second day, falling 9.89 points or 0.31 per cent to end lower at 3,208.91 yesterday, even as the Dow futures was hovering in green territory.

Turnover amounted to 2.17 billion worth units $1.13 billion.

Trading in the broad market was mixed - excluding warrants, gainers beat losers 210 to 208.

Ms Margaret Yang, analyst at CMC Markets Singapore, said yesterday morning: "The Straits Times Index has been hovering within a well-defined range of 3,200-3,270 for over two months.

"Investors are probably waiting for the release of the earnings season which might provide fresh catalysts to drive market movements."

Penny stocks were in play yesterday, while Asian traders extended the oil rally, boosting stocks of energy companies in Singapore, Hong Kong, Tokyo and Sydney.

This, after the Opec cartel remarked that its supply cuts with Russia were taking effect.

Shares of Kris Energy, GSS Energy and Yangzijiang Shipbuilding Group were buoyed by the consolidation of gains in oil prices amid reports that US inventories had fallen.

Kris Energy and GSS Energy, among the actives list, rose one cent and 0.3 cent at $0.133 and $0.173 respectively.

Yangzijiang Shipbuilding's stock moved up half a cent to close at $1.26.

Index components DBS, Genting Singapore, Hong Kong Land and Jardine Matheson Holdings dragged down the STI after chalking up a combined loss of 6.8 points.

Leading the pack was DBS, whose counter lost 17 cents to end the session at $20.60, with five million units changing hands.

ACTIVE

Among the most active counters, Genting Singapore shares were down two cents at $1.055, with almost 28 million shares traded.

On the other hand, shares of OCBC climbed four cents to $10.83 after news that one bidder had been shortlisted to take over the bank's and Great Eastern Holdings' combined stakes in United Engineers Limited and its subsidiary WBL Corp Ltd.

Also in positive territory was CapitaLand, whose stock gained two cents to end the day at $3.53. Some 4.7 million shares were traded.

As markets awaited Ms Yellen's remarks, Fed Governor Lael Brainard indicated that the central bank should "soon" take it easy on future interest rate hikes, as long as economic data on US jobs and growth holds up.

Still, investors' confidence has been somewhat shaken as the crisis surrounding US President Donald Trump deepened after his son Donald Trump Jr released e-mails showing the latter had welcomed Russia's efforts to support the Trump presidential campaign against Mrs Hillary Clinton.

And some analysts have said that 2017 would likely be a roller-coaster ride for energy prices.

Mr Barnabas Gan, economist from global treasury research and strategy at OCBC Bank, said although there are indicators that suggest higher oil prices into the end of the year, supply uncertainties might continue to leave oil prices behaving in a choppy fashion into the second half of 2017.

"We maintain our WTI and Brent outlook at US$55 per barrel and US$57 per barrel respectively. Our bullish call is underpinned on a further rebalancing scenario into year-end.

"Importantly, oil price still remains below Opec's comfort level (perceived at US$50/bbl). Healthy energy demand into the year should be predicated by the ongoing growth outlook to-date," he said.

This article appears in The Business Times today. For full listings of SGX prices, go to btd.sg/BTmkts

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