Wall St rally, local banks boost STI

A positive start to bank earnings here coupled with Wall Street's rally on the back of strong earnings meant that Singapore equities continued to trend up, extending the week's earlier gains.

The upbeat mood meant that the benchmark Straits Times Index (STI) chalked up 17.99 points, or 0.54 per cent, to finish yesterday's trading at 3,354.71 - the highest since the late-July 2015 high of 3,373.48.

Turnover was 3.1 billion worth $1.5 billion. Losers outnumbered gainers 277 to 208.

IG market strategist Jingyi Pan said yesterday morning that the highly anticipated bank earnings in Singapore had kick-started with OCBC Bank's pleasant surprise of a 22 per cent increase in Q2 2017 profit and a 19.1 per cent upside surprise for earnings per share.

"As widely expected by the market, the strong earnings growth had been a result of performance in its trading and life assurance arms, while its net interest income and fees and commissions had also contributed to the improvements," Ms Pan said.

"OCBC had arguably been expected to be the best performer among the trio of banks, so while the positive Q2 results may bring about a boost for the domestic banking sector, UOB (due today) and DBS results remain ones to closely follow."

The three local banks added a combined 21 points to the index.

OCBC's counter led the gains, rising 24 cents to $11.49 on a volume of 10.3 million units.

DBS gained 36 cents to finish at $22.25, and UOB added 32 cents to $24.60.

Rowsley's counter remained the most active, ending the session 1.2 cents lower at $0.121 on a volume of 560.3 million shares.

Shares of Noble Group, also among the actives, lost 18 cents to finish at $0.395, with 75.9 million units changing hands.

The commodity trader on Wednesday said it is selling two businesses - global oil liquids business (its most working capital-intensive operation) and its North American gas and power business - to alleviate its liquidity crunch.

Japan's Nikkei 225 rose 0.2 per cent, while Hong Kong's Hang Seng went up 0.7 per cent.

Certainty for global markets came in the form of the conclusion of the US Federal Open Market Committee (FOMC) meeting, where the central bank kept its policy rate unchanged.

Mr Lee Ferridge, head of multi-asset strategy for North America at State Street Global Markets, said: "As widely expected, the July FOMC meeting produced few fireworks.

"This means market expectations of a start to balance sheet reduction in September remain intact, while opinions on the prospect of a December hike continue to be mixed.

"All of this is likely to do little to stop the recent decline in the dollar but, nor should it accelerate it.

"The Federal Reserve is sticking to its plan for the gradual reduction of accommodation, but it will need a pick-up in US data to convince the market that 2017 will see a third rate hike."

Citi Research said in its Asia economics and strategy note yesterday that it retains its view for further foreign-exchange outperformance of most emerging markets' Asian currencies, adding that it remains cautious in rates.

"We advise only selective exposure to duration in emerging markets in Asia. At this stage of the business cycle, we prefer to eschew duration exposure, except where easing cycles are still ongoing, or where too much tightening is priced," Citi said.

"We also fear that investors may be unwilling to hold much duration exposure going into the September meetings of the European Central Bank and the Fed, and possibly even ahead of Mario Draghi's comments at Jackson Hole."

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