Business

STI dips 0.8% on US uncertainty

Trump administration's moves affecting global markets

Throughout the week, the Straits Times Index moved in near-perfect lockstep with the Dow futures while punters expended their energies on penny stocks.

Anticipating what Wall Street might do is to be expected because asset markets everywhere are now hostage to whatever economic and political strategies the new US administration aims to pursue.

Wall Street is perhaps the best gauge of the impact of those policies - even if they benefit America to the exclusion of the rest of the world.

So it was yesterday when the STI finished 2.14 points weaker at 3,041.94. The futures contract, however, bounced up into positive territory at 5pm.

Yesterday's fall brought the STI's loss for the week to 23 points or 0.8 per cent, and the year-to-date rise to 5.6 per cent.

Volume has picked up marginally from the S$1 billion averages seen towards the end of 2016, with the day's 2.8 billion units worth S$1.1 billion in line with daily business this year.

Excluding warrants, there were 248 rises versus 190 falls. Of the top 20 actives, 18 were priced below S$0.50.

Among the key external events that grabbed the headlines were US President Trump's immigration ban, the legality of which is still being debated by judges in some US states; US making protectionist threats against Mexico; and the US Federal Reserve's decision to keep interest rates unchanged at its first Federal Open Market Committee meeting of the year.

The latter was widely expected because there has been no clarity so far on the fiscal goals that the Trump government will implement.

On the subject of clarity and certainty, Rabobank in its daily comment titled "Stingraaaay, Stingray!" perhaps summed it up best: "As the market heads for the end of its second full week of playing Trumpety Trump, there is still no let-up in the flow of surprises: As the introduction to the UK 1960's marionette TV show Stingray used to blaze out, 'Anything can happen in the next half hour!' "

Closer to home, oil and gas firm Ezra Holdings halted trading to make an announcement about its finances.

Yesterday, it said it faces a possible US$170 million writedown and is still in the process of studying restructuring options.

RESTRUCTURING

"As also disclosed in the company's announcement of its unaudited financial results for the financial year and fourth quarter ended Aug 31, 2016, in the event the restructuring is not favourably completed in a timely manner, the company and the group will be faced with a going concern issue," said Ezra.

OCBC Investment Research yesterday said that since Opec said it would cut production in late Nov 2016, oil has rebounded from the mid-US$40 per barrel level to the mid-US$50s.

"Despite some returning interest in the sector in fear of losing out during an oil price rally, we also get the sense that investors in general are still cautious about entering the sector in a big way, due to conservative company guidance and the continued flow of some negative news," said the broker.

"Looking ahead, investors are advised to be nimble amidst the uncertainties, but those with a longer-term horizon could consider accumulating on dips our preferred pick, Sembcorp Industries."

As the market heads for the end of its second full week of playing Trumpety Trump there is still no let-up in the flow of surprises. As the 1960’s TV show Stingray used to blaze out, ‘Anything can happen in the next half hour’.Rabobank in its daily comment

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