Business

STI ends three-day winning streak

Profit-taking and US technology sell-off drag the Straits Times Index down 0.7% to 3,330.75

A rally-and-pause play unfolded in the local bourse on the back of profit-taking after earlier gains and an overnight sell-off in United States stocks due to weaker tech earnings.

The downbeat tone led the Straits Times Index (STI) to snap a three-day winning streak yesterday, falling 24 points, or 0.71 per cent, to finish at 3,330.75.

Week-on-week, the STI gained 16.6 points, or 0.5 per cent, buoyed by the earnings season in Singapore, which came into full force and seemed to have effortlessly kept the index above the psychological 3,300 mark.

Ahead of advanced estimates of second-quarter growth out of the US and earlier gains over the week, other major Asian markets closed mixed yesterday.

Japan's Nikkei 225 and Hong Kong's Hang Seng lost 0.6 per cent, while China's Shanghai Composite climbed 0.1 per cent.

US stocks, except for the Dow, pulled back from record highs overnight on Thursday, as an earnings miss from Amazon led to a sell-off in US tech stocks.

The three key stock indexes closed mixed, with the Dow Jones Industrial Average up 0.4 per cent and the S&P 500 and Nasdaq in negative territory by 0.1 per cent and 0.9 per cent, respectively, as tech stocks swung to sharp losses.

This month's Federal Reserve policy statement was issued over the week with a dovish touch.

Although the central bank signalled that it would begin shrinking its massive holding of bonds "relatively soon", concerns over inflation remaining "somewhat below 2 per cent in the near term stole the spotlight", said FXTM research analyst Lukman Otunuga.

Following the Fed's decision to leave interest rates unchanged, Schroders reckoned in a recent report that a combination of balance-sheet reduction and low inflation in the US suggests there may not be another rate hike this year.

'FISCAL BOOST'

"Further tightening will depend on inflation picking up and some fiscal boost," it said.

"We expect both, but this will probably not be apparent in the data until later in 2018."

Singapore released some encouraging labour data in the second quarter, which showed that unemployment and layoffs were both lower than in the previous quarter.

However, total employment continued to shrink.

Some 2.8 billion shares worth $1.3 billion were traded on the local market yesterday, versus Thursday's 3.1 billion shares worth $1.5 billion.

Losers outnumbered gainers 275 to 171.

Index stalwarts OCBC and UOB reported their first-half results over the week.

UOB yesterday reported a 5.5 per cent increase in Q2 net profit from a year ago, which is in line with market expectations.

This came after a 22 per cent jump in the quarterly earnings report from OCBC a day before.

The three local banks saw their stocks fall yesterday.

DBS lost 57 cents, or 2.6 per cent, to $21.68; OCBC slipped 10 cents, or 0.9 per cent, to $11.39; and UOB fell 55 cents, or 2.2 per cent, to $24.05.

Malaysia-based property developer Aspen Holdings failed to make a remarkable debut on Catalist, finishing at 21 cents, below its offer price of 23 cents, with 12 million shares done.

Rowsley capped an entire week of descent after spectacular rises in the previous week on news that its controlling owner Peter Lim was injecting $1.9 billion healthcare assets into the firm.

The counter lost another 1.1 cents, or 9 per cent, to close at 11 cents yesterday - down 6.4 cents from the high of 17.4 cents it reached the previous Friday.

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