Business

Market resilient to US political concerns

STI rebounds in late afternoon to end at 3,224.1, for a net loss of only 3.61 points, from intraday low of 3,207

The local stock market yesterday shrugged off political worries surrounding the Trump administration that drove the Dow futures down by more than 100 points in the afternoon.

After dropping to an intraday low of 3,207, the Straits Times Index rebounded in the late afternoon to finish at 3,224.1, for a net loss of just 3.61 points.

Turnover throughout the market was a moderate 2.3 billion units worth $1.3 billion and excluding warrants, there were 214 rises versus 234 falls - reasonably firm considering the potential sell-off on Wall Street yesterday.

Brokers here yesterday woke up to news that the White House has had to deny reports that President Donald Trump asked ex-FBI director James Comey to drop an investigation into ex-national security adviser Michael Flynn's alleged links to Russia just before Mr Trump sacked Mr Comey.

Analysts were quoted as saying that given the problems engulfing the incumbent administration, doubts are surfacing over its ability to push through the economic agenda on which Wall Street has been banking.

Apart from the sell-off in the futures market, the US dollar was also hit, losing ground against the Japanese yen and euro.

Local bank stocks had a mixed outing, with DBS rising but with weakness in UOB and OCBC.

In the property sector, CapitaLand ended unchanged at $3.50 on volume of 9.6 million and City Developments slipped $0.05 to $10.33 with 2.1 million traded.

Activity in the second line was focused on familiar names such as DISA, Noble and AddValue Technologies. In percentage terms, social commerce firm YuuZoo was among the better performers with a $0.007 or 10.9 per cent rise to $0.071 on volume of 43.6 million.

Among news of interest was that Singapore's non-oil domestic exports dipped 0.7 per cent in April, after five consecutive months of growth. Maybank Kim Eng's economist Chua Hak Bin in his "Exports Contract on Volatile Pharma, Electronics Healthy" report described the fall as a "temporary blip" from the trade recovery witnessed over the previous five months.

"Electronics exports are still expanding at a healthy pace and more representative of global demand.

"We think Singapore's exports and manufacturing will continue to be well-supported for the rest of this year, albeit at a more moderate pace, in line with our GDP forecast of +3 per cent for 2017," said Dr Chua.

DBS, on the other hand, said signs are surfacing that the manufacturing rally over the past six months could be nearing its end.

"The strong performance thus far has been largely driven by consumer demand. To sustain the current pace of expansion, much will really depend on companies increasing their capex going forward," said DBS's senior economist Irvin Seah.

"That is, capital investment growth in key markets such as the US, China and to a lesser extent, Eurozone, would have to increase in order to provide further impetus to manufacturing activities. Otherwise, expect growth momentum to slow in subsequent quarters."

Bank of America-Merrill Lynch's latest fund manager survey found that investors believe the global economy to be "just right", with a record high 34 per cent citing a Goldilocks scenario of high growth and low inflation.

Meanwhile, China was most commonly cited as presenting the main "tail risk", with 31 per cent of global fund managers pointing to Chinese credit tightening as the biggest risk in the market.

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