Business

STI snaps out of losing streak

Three key risk events - UK election results, ECB's policy decision and former FBI chief's testimony - fail to dampen sentiment

"Triple Thursday" may have kept investors on the sidelines, yet the local bourse finished higher, snapping out of three straight days of losses ahead of three key events - the United Kingdom's election outcome, the European Central Bank's (ECB) policy decision and former Federal Bureau of Investigation chief James Comey's testimony.

The benchmark Straits Times Index (STI) rose 6.56 points to finish at 3,237.05 with 1.9 billion shares worth nearly $900 million done.

Regional markets closed mixed, with Japan's Nikkei 225 and Topix losing 0.4 per cent, while Hong Kong's Hang Seng Index and China's Shanghai Composite finished higher by 0.3 per cent.

The three key US stock indices closed higher overnight on Wednesday despite sharp falls in energy prices.

Although the opening remarks by Mr Comey, which hogged the limelight, was explosive, it did not stir undue market volatility in Wall Street.

"The week's three events that investors have been waiting to put behind them... happen today," said ING's head of Asia research Tim Condon yesterday.

The sense of wariness ahead of Mr Comey's actual testimony was palpable among traders, more so as the two bigger risk events were also set to unfold.

"Markets are expecting an upgrade to growth projections as well as a hawkish tilt in ECB language or tone.

"Though euro-area growth outlook is likely to be revised higher, this should not be treated as a surprise, given that recent ECB speaks already highlighted the upbeat economic outlook," said Maybank FX Research.

As for the United Kingdom election, results could trickle in only in the early hours of today in Asia, said IG Singapore's market strategist Jingyi Pan, adding that unlike the French election, polls have been varied.

Politics aside, things appear somewhat hopeful for the macro backdrop.

'STRENGTHEN'

"The global economy continues to strengthen. If the numbers are not wildly better than last year, then it is because last year was not bad to begin with," said DBS Bank's chief economist David Carbon.

Still, perception seems to lag reality, he remarked.

"It is not just in Asia... it is everywhere. The US has been getting stronger, Europe has been getting stronger and Japan and the rest of Asia have been getting stronger. Yet many are still asking whether sentiment might have gotten ahead of data. Not so much, really. Our sense is it could not be further behind."

What does it mean for monetary policy?

"We have had two hikes in two quarters, and markets think a June hike will make it three-for-three. Our guess is the Federal Reserve will not stop there.

"Why would it? Everything in the economy is back to normal," said Mr Carbon.

The local stock market saw rises in 204 counters and falls in 237 counters.

The day's gains were led by Jardine Matheson, which rose 65 US cents (90 Singapore cents), or nearly 1 per cent, to US$66.60, and CapitaLand, which closed four cents higher, or just over 1 per cent, at $3.62.

Top active stocks among the STI constituents included Singtel, which gained one cent, or 0.3 per cent, to $3.76, and DBS Bank, which closed four cents, or 0.2 per cent, higher at $20.47.

Sanli Environmental, an environmental engineering firm, made its debut on Catalist, finishing at 37.5 cents, a premium of 15 cents or 67 per cent over its offer price of 22.5 cents.

SIA gained three cents, or 0.3 per cent, to $10. The airline has said that job cuts are possible as part of a business review it kicked off to revive earnings following a quarterly loss.

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