S'pore shares rally on strong global growth

Singapore equities rallied ahead of US President Donald Trump's pick for chair of the Federal Reserve, the Federal Open Market Committee (FOMC) meeting and the unveiling of US tax plans, buoyed by optimism that global growth is strong.

The benchmark Straits Times Index (STI) added 17.53 points or 0.52 per cent yesterday to close at 3,391.61 - the highest in over two years. The gains recorded came from banking stocks and shares of Keppel Corporation, even as heavyweights including some of the Jardine group of companies chalked up losses.

The STI turnover came in at 2.5 billion worth S$1.5 billion, which worked out to an average of S$0.60 a share. Trading was firm with gainers outnumbering losers 305 to 158, excluding warrants.

The counters of OCBC, DBS and UOB added a combined nine points to the index. OCBC shares closed up four Singapore cents at S$11.94, following better-than-expected Q3 earnings. UOB and DBS will report Q3 results on Nov 3 and 6 respectively.

Among the actives was Sembcorp Marine, whose stock gained eight Singapore cents to end at S$2.01. The company returned to profitability in Q3 with a net gain of S$2.72 million, a reversal from a loss of S$21.79 million for a year-ago period despite a tough operating environment in the offshore and marine (O&M) sector.

STI's advances followed an earlier fresh high on Wall Street that was led by solid US economic data, rising oil prices and a series of strong earnings reports.

Mr Philip Wee, strategist at DBS Group Research, said the US dollar is likely to find support from Wednesday's FOMC meeting affirming a Fed hike this December.

"The DXY (US dollar) index corrected lower on Monday on news that Fed governor Jerome Powell was ahead of John Taylor in the race to replace Janet Yellen as Fed Chair next year. This brought the US 10-year treasury yield down to 2.38 per cent on Tuesday from last week's high of 2.46 per cent. The DXY was, however, reluctant to extend its downside below 94.50 on Tuesday."

Mr Wee added that investors could possibly shrug off the Fed chair pick as they turn their attention to the potentially strong US jobs report to come this Friday. US non-farm payrolls are expected to rebound to 200,000-300,000 in October after last month's negative 33,000 reading, he said.

Mr Rob Carnell, ING's head of research for Asia, on Wednesday noted that US data on payrolls "will likely be dominated by the continued absence of any notable wage pick-up", adding that it would not matter for monetary policy setting.

Investors' upbeat mood also spread through the region with Tokyo's Nikkei closing higher, Seoul's Kospi ending the day at a record high, Australian shares finishing near a six-month high and Hong Kong's Hang Seng advancing. New Zealand shares bucked the trend, slipping 1.1 per cent - the biggest drop for the index since March.

US dollar bulls would also pay close attention to the US House of Republicans who are to reveal their tax plan on Thursday, a delay that indicated potential trouble ahead as congressional leadership try to hammer out a deal.

Back home, Mr Irvin Seah, economist at DBS Bank, said that inflation is now expected to register 1 per cent in 2018, up from a revised 0.6 per cent this year due to persistent downside surprises in inflation readings in recent months, as well as benign inflationary pressure going forward.

Mr Seah said the benign inflation outlook and a soft labour market are among key factors that prompted the Monetary Authority of Singapore (MAS) to maintain an accommodative monetary policy stance.

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