Business

Good news from US, China pushes markets up

STI goes past 3,200 with 1.6% gain after Trump sacks Bolton and China comes up with good news

There was much cheer for traders during yesterday's session, thanks to a confluence of factors that supported risk appetite ahead of today's European Central Bank's rate decision.

Singapore's Straits Times Index (STI) moved ahead from the opening bell, eventually settling at 3,204.52, gaining 48.81 points or 1.6 per cent.

It was much of the same elsewhere in the Asia-Pacific as Australia, Hong Kong, Japan, Malaysia and South Korea posted gains.

China bucked the trend, closing 12.39 points or 0.4 per cent lower at 3,008.81.

Markets in Asia started the day off digesting news that US President Donald Trump had fired National Security Adviser John Bolton due to a number of "strong disagreements".

"The obvious question is, why is this important to financial markets?" said Oanda Asia-Pacific senior market analyst Jeffrey Halley.

"Well, John Bolton was an uber-hawk who advocated hardline approaches to North Korea, Russia and Iran among others. The last is particularly significant, as his departure could potentially thaw relations with Iran."

On the US-China trade front, investors in search of further reasons to believe the frosty relationship between the two is thawing did not have to look too far.

Yesterday afternoon, China announced that it approved tariff exemptions of products from the US ahead of talks in Washington in October.

Crucially though, Beijing did not put corn, soya beans and pork on the list.

China also moved to encourage foreign investment in its financial markets, with global funds no longer needing approval to purchase Chinese equities and bonds.

The effects of rising bond yields continued to be in play, with more investors making a run for equities.

BULLISH SPIRITS

But the day was not without worry though bullish spirits won out.

FXTM market analyst Han Tan said: "Still, South Korea's decision to file a World Trade Organisation complaint against Japan is reminding investors that global trade tensions remain an ongoing concern."

In Singapore, trading volume was 1.45 billion securities, 21 per cent over the daily average in the first eight months of 2019.

Total turnover came to $1.41 billion, 31 per cent more than the January-to-August daily average.

Across the market, advancers trumped decliners 238 to 157. The blue-chip index had just four of the 30 counters in the red.

With 62.2 million shares changing hands, Yangzijiang Shipbuilding remained the STI's most active counter. Its stock jumped five cents or 5 per cent to close at $1.06.

The shipbuilder is still trading below $1.30, its closing price on Aug 7 - the session before its shares plummeted by more than 30 per cent over two trading days.

The local banks continued to do the heavy lifting on the benchmark.

DBS Group Holdings advanced 30 cents or 1.2 per cent to $25.25 while OCBC Bank added 15 cents or 1.4 per cent to $11.

United Overseas Bank was the best-performing of the three, finishing at $26.37 on a 60 cents or 2.3 per cent rise.

Sembcorp Industries shares rose six cents or 2.8 per cent to $2.21 while its subsidiary Sembcorp Marine closed four cents or 3.3 per cent up at $1.26.

Keppel Corp gained 11 cents or 1.8 per cent to $6.21.

Offshore and marine sector picks, CMC Markets analyst Margaret Yang noted, were likely to have built up strong gains on the back of rising crude oil prices with "the new appointment of Saudi Arabia's energy minister inspiring hope for further production cuts".

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