Investors wary ahead of data release

This article is more than 12 months old

STI opens higher due to better-than-expected growth but ends down 12.21 points

Inflation fears continue to linger, with sentiment fragile ahead of the release of two key inflation indicators in the US - the Consumer Price Index (CPI) yesterday and the Producer Price Index (PPI) today.

"This is going to be one of the most watched data releases on inflation that we have seen in recent memory," said Mr Michael Arone, chief investment strategist at State Street Global Advisors.

Mr David Blitzer, managing director and chairman of the S&P Index Committee, said while the CPI and PPI have shown an upward trend since 2015 - reflecting rising oil prices in 2016-17 as well as an improving US economy - there are no hints that prices will surge soon .

Similarly, while the PPI is more volatile, it is not signalling any immediate problems. Market consensus is for the year-on-year rise in CPI to remain under 2 per cent and for the PPI to top 2 per cent.

The Dow Jones Industrial Average added 39.18 points on Tuesday to close at 24,640.45, up 0.16 per cent from the previous day's close.

Trading in Asia was mixed.

"As many Asian markets - China, Hong Kong, Singapore, Malaysia and Indonesia will be closed for the Chinese New Year celebration by end of this week, traders may prefer to stay on the sidelines or take some hedging measures - such as using Guaranteed Stop Loss Orders to protect their portfolio," said Ms Margaret Yang, market analyst at CMC Markets in Singapore.

The benchmark Straits Times Index (STI) opened higher, underpinned by Singapore's better-than-expected economic growth.

It ended at 3,402.86, down 12.21 points or 0.36 per cent. About 1.9 billion shares worth $1.6 billion were traded, with 212 gainers to 243 losers.

The people at DBS Group Research expect the correction to halt at 3,330-3,350.

"We expect 'base building' and a more gradual recovery from here; and, are not changing our base-case year-end objective of 3,688 and our 'optimistic' objective of 3,800."

Singapore's economy posted its highest growth rate since 2014. The economy expanded 3.6 per cent in 2017, faster than the 2.4 per cent growth in 2016 and higher than the initial projection of 1 per cent to 3 per cent for 2017, as it benefited from robust electronics demand.

Looking ahead, the Ministry of Trade and Industry (MTI) expects 2018 gross domestic product growth to moderate from 2017's performance, and come in slightly above the middle of the forecast range of 1.5 per cent to 3.5 per cent.

Singapore's trade also staged a turnaround in 2017 as growth rates reached a seven-year high, with the Government upgrading its forecast for 2018. Non-oil domestic exports grew 8.8 per cent in 2017, after a 2.8 per cent decline in 2016, due to higher exports of electronic and non-electronic products.

On the corporate front, OCBC Bank ended off its intraday high of $12.70, to close at $12.26, down 31 cents, or 2.5 per cent. Its fourth-quarter results beat forecasts with a 31 per cent rise in net profit to $1.03 billion, from $789 million a year ago.

United Overseas Bank's stock price hit $26.96, before closing at $26.24, down 60 cents, or 2.24 per cent from Tuesday's close. The bank reported a 16 per cent rise in its fourth-quarter net profit to $855 million.

DBS bucked the trend to close at $28.03, up 40 cents, or 1.45 per cent. Singapore Airlines ended higher, settling at $11.15, up 53 cents, or 5 per cent.

DBS Group Research and CGS-CIMB Securities Research upgraded the target prices for SIA after the national carrier posted a 62 per cent jump in net profit to $286.1 million for the third quarter.