Business

STI down 0.7% on weak oil, Trump news

Despite the Dow hitting an all-time high on Wednesday, local bank stocks suffered losses yesterday

The local stock market shrugged off Wednesday's all-time high for the Dow Jones Industrial Average. It opted instead to focus on a fall in the Dow futures and a 1.2 per cent loss for Hong Kong that came after a 3.5 per cent drop in oil prices and news that US President Donald Trump is under investigation for possible obstruction of justice.

Banks were the main victims in the 21.34-point or 0.7 per cent loss at 3,232.09 sustained by the Straits Times Index yesterday, a fall that occurred with trading volume of 2.2 billion units worth $1.1 billion - the highest so far this week.

The broad market registered 148 rises versus 302 falls, excluding warrants. The FTSE ST Financials Index lost 0.8 per cent at 906.68.

The Dow futures traded in the red throughout the day after the underlying index had ended at a new all-time high on Wednesday.

At 5pm, the contract dropped 75 points, pointing clearly to a weak Thursday opening for Wall Street.

The Washington Post on Wednesday reported that the special counsel who is investigating Russia's meddling in last year's US presidential election is now also looking into whether President Trump tried to thwart that investigation.

In the second line, shares of brand development firm Lifebrandz finished unchanged at $0.048 on volume of 55.5 million. The company had been queried by the Singapore Exchange on Wednesday and replied that it did not know of reasons for the activity in its shares that day.

In a separate announcement to address an article by The Business Times which reported market talk that Lifebrandz could be a reverse-takeover target, the company noted it recently completed the issuance of rights shares cum warrants.

"As previously announced, the Group has gone through some restructuring recently. With the appointment of Mr Saito Hiroyuki as the executive chairman and CEO, the company and board are cautiously exploring business opportunities to position and transform its business direction," said Lifebrandz.

Property developer World Class Global debuted on Catalist, its shares finishing at $0.275 on volume of 18.5 million. The offer price was $0.26 per share.

The US Federal Open Market Committee (FOMC) lived up to expectations when it raised its short-term interest rates for the second time this year by 25 basis points on Wednesday.

Mr Rick Rieder, chief investment officer of global fixed income at BlackRock, said the meeting documents and the guidance provided by chair Janet Yellen at the FOMC press conference continue to signal a total of three rate hikes this year, alongside a change to the Federal Reserve's re-investment policy later in the year.

Ms Anna Stupnytska, global economist at Fidelity International, said the tone of the statement came across as relatively hawkish, despite the disappointing readings on core inflation, which the Fed attributed partly to transitory factors.

"I still expect this to be the last hike for 2017, given emerging headwinds for the US economy, in particular for consumption, as well as the worryingly weak inflation and wage growth paths," said Ms Stupnytska.

Bank of America-Merrill Lynch (BoA-ML) in its June 15 Equity Strategy report said at the start of the year, oil prices were projected to go up, instead they are down 15 per cent.

"US bond yields were expected to go up to 2.6 per cent by Q2 2017. They are down to 2.2 per cent. The USD was forecast to go up to 118 yen and 1.03 euros by Q2 2017. It went down instead. All three are positive for Asia/EM (emerging market) equities."

"We remain long-term bullish on both," said BoA-ML, adding that Asia/EM possess excellent fundamentals.

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

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