Business

STI falls a further 0.8% on poor sentiment

Traders continue to worry about the prospects of the US tax reform plan as well as the pace of the Federal Reserve's rate hike

Share prices on the local bourse caved to log its fifth straight day of losses as it chose once again to take its cue from Wall Street's soft overnight showing.

It also ended up the day's biggest loser among its regional peers. The key Straits Times Index fell 27.4 points or 0.8 per cent to 3,341.3 yesterday with only four out of the 30 index stocks seeing gains.

The sell-off on Wall Street was driven by energy and consumer non-cyclical sectors.

"Even steeper sell-offs were experienced earlier this year when the S&P 500 marched towards a new high in March, June and August with every sell-off seen as an opportunity to buy the dips. Does this one look similar?" said FXTM chief market strategist Hussein Sayed.

Most other Asian markets held up well as oil prices firmed up. Japan's Nikkei 225 rose 1.5 per cent, Hong Kong's Hang Seng was up 0.6 per cent while South Korea's Kospi inched up 0.7 per cent.

Tokyo recovered from a six-day losing streak and most European indices pushed higher in morning deals.

China's Shanghai Composite however, closed flat.

Traders also continued to worry about the prospects of the US tax reform plan as well as the pace of the Federal Reserve's rate hike.

ING forecasts two Fed rate hikes next year. "The markets are sceptical about more than one hike. While it will be data-dependent, we think the Fed is broadening out the reasons for tightening policy, with references to loose financial conditions and rich asset valuations," it said in a note.

As far as global growth is concerned however, it appears to be less of a worry. Indeed, this year's story has been reassuring for financial markets.

"Growth, for the most part, surprised on the upside, but inflation on the downside. Bonds, equities and everything in between, rallied as a result. In most economies, data over the past month or so stuck to the broader theme," said HSBC chief Asean economist Joseph Incalcaterra.

"Yes, it might all feel a bit snoozy. But we suspect upside surprises on inflation and downside surprises on activity in the coming month will give a jolt to anyone tempted to doze off," he added in a recent note.

Banking stocks led yesterday's losses with DBS retreating 27 Singapore cents or 1.1 per cent to $23.34. UOB shed 18 Singapore cents or 0.7 per cent to $24.70 while OCBC fell 10 Singapore cents or 0.9 per cent to $11.45.

ComfortDelGro was also among the top losers, falling 8 Singapore cents or 3.8 per cent to $2.01. The counter has gained 4.5 per cent to Wednesday since it released its third-quarter results last Friday. But KGI Securities analyst Joel Ng said that there was no basis for the recent jump as earnings were dragged by muted performance of the group's taxi business.

Singtel fell 3 Singapore cents or 0.8 per cent to $3.66. It was the third most active counter for the day with 41 million shares worth $149 million changing hands.

Meanwhile, Noble Group continued to gain for the second straight session, this time climbing 1.1 Singapore cents or 5.5 per cent to 21 Singapore cents.

After Wednesday's market close, the commodity trader said it was reorganising activities for the rare earth and special ores and metals markets under the umbrella of two wholly-owned units - Kalon Resources and Talaxis - to capture opportunities from new markets.

Darco Water Technologies slipped 4 Singapore cents or nearly 7 per cent to 54 Singapore cents. The water treatment specialist said it was raising $900,000 through a placement of 1.5 million shares at 60 Singapore cents each.

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