Business

SGX follows sentiment on Wall Street

US stock market indexes enjoy new highs as political upheaval seemingly settles down

The local stock market this week took its cues from Wall Street, where the political upheaval of a fortnight ago appears to have settled down. Or has it?

The behaviour of US stocks gives the impression that nothing will come out of a probe into Russia's interference in last year's US presidential election, the major indices having recovered their poise after a large wobble two weeks ago.

On Thursday, the S&P 500 and Nasdaq Composite closed at new all-time highs, while the Dow Jones Industrial Average ended at its second highest ever.

As reports have it, all eyes are on the Trump administration's Budget, which includes large cuts to social spending and big increases to military spending.

Yet the fact remains that almost every day, new allegations surface about Russia and the elections that could very well damage the White House, though for some reason or other, markets seem keen to gloss over them.

As far as investors here are concerned - a firm Wall Street means a firm local market, though a 14.95-point loss yesterday for the Straits Times Index did trim its gain for the week to just three points at 3,219.42.

Yesterday's loss was most likely in anticipation of weakness in the US - the Dow futures dropped into the red at 5pm and Europe opened weak.

"MTI’s outlook for the year is more upbeat, stating that gross domestic product growth is ‘likely to come in higher than 2 per cent’, barring downside risks,"Maybank Kim Eng

Volume, though, was a concern. Yesterday's haul was a poor 1.8 billion units worth $995 million, with activity in the banks and a handful of other index heavyweights having quietened down this week.

Among penny stocks, Noble Group was in the limelight - the stock plunged mid-week after Reuters reported that China's Sinochem, which at one time was interested in buying into Noble, has abandoned that plan.

It prompted a few local houses to impose curbs on the trading of Noble Group shares - the stock ending unchanged yesterday at $0.42 on volume of 64.9 million.

Other penny stocks that enjoyed plenty of attention included Serrano, Addvalue and YuuZoo.

INTEREST RATES

Over in the US, minutes from the Federal Reserve's May 2 and 3 meetings were released on Wednesday, stating that policymakers had agreed they should hold off from raising interest rates until it is clear that a recent US economic slowdown is only temporary, though most said an increase is coming soon.

In the federal funds futures market, the probability of a interest rate hike next month is now 100 per cent, falling slightly to 93 per cent for July.

Among other news was the Ministry of Trade and Industry (MTI) hinting that full-year domestic economic growth may be above 2 per cent.

In response, Maybank Kim Eng (MKE) said it is maintaining its full-year forecast at 3 per cent for the year.

"MTI's outlook for the year is more upbeat, stating that gross domestic product growth is 'likely to come in higher than 2 per cent', barring downside risks," noted MKE.

"Growth is broadening from electronics and transport and storage services to other segments, including financial, business and wholesale trade services, albeit somewhat slowly... We maintain our view that the Monetary Authority of Singapore will likely tighten to a 'mild appreciation bias' in October, predicated on a stronger growth recovery in 2Q."

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