STI up 0.4% ahead of ECB policy meeting

The Singapore stock market shrugged off a softer lead from Wall Street to notch up its second consecutive day of gains ahead of a key European Central Bank policy meeting yesterday.

The key Straits Times Index gained 12.37 points or 0.4 per cent to 3,356.25 with some 1.8 billion shares worth $1.1 billion traded.

"The STI is currently facing some selling pressure at the 3,350 area, the previous high of the July-to-August period. Strong Q3 earnings results are needed to give the STI a push to break through this resistance," said CMC Markets analyst Margaret Yang Yan.

Regional peers put out a mixed showing; Hong Kong's Hang Seng slipped 0.4 per cent while China's Shanghai Composite gained 0.3 per cent. South Korea's Kospi slipped 0.5 per cent while Australia's ASX 200 inched up 0.2 per cent.

US stocks declined overnight on Wednesday led by some big earnings disappointment.

The S&P, Dow Jones Industrial Average and Nasdaq lost 0.5 per cent overnight on Wednesday.

The ECB meeting is a key risk event. While the market expects no change in the central bank's interest rate, there is expectation of some clarity on the ECB's future tapering plan.

"For sure, announcing the details of any taper ('adjustment' in ECB-speak) today will be no surprise. But we think the ECB believes markets are indifferent between a taper that is bigger up front, but goes on longer and a more modest adjustment that is wrapped up sooner," said ING Asia-Pacific Economics team in a note.

Latest data revealed that Singapore's factory production for September rose 14.6 per cent compared to a year ago, beating economists' expectations of 10 per cent in a poll by Bloomberg.

With this stronger-than-expected showing, economists say that the gross domestic product (GDP) for the third quarter is likely to be revised upwards.

"We are raising our GDP growth forecast by another leg to 3.4 per cent (from 3.2 per cent) in 2017. Final Q3 GDP growth is likely to come in at 5.1 per cent, above the government's earlier flash estimate of 4.6 per cent," said Maybank Kim Eng economist Chua Hak Bin, adding that the upgrade takes into account stronger third quarter manufacturing and better services growth.

The first of three banks' earnings came in from OCBC with the bank reporting a 12 per cent improvement in third quarter net profit to $1.06 billion from a year ago led primarily to a rise in interest income.

Asset quality, however, continued to show signs of stress due to the oil and gas downturn.

UOB and DBS will report their quarterly results on Nov 3 and 6 respectively.

OCBC finished at $11.57 - up 2 Singapore cents or 0.2 per cent. The two other banks also led the gains with DBS up 15 Singapore cents or 0.7 per cent to $22.35 while UOB advanced by 20 Singapore cents or 0.8 per cent to $24.80.

Genting Singapore climbed 5 Singapore cents or 4 per cent to $1.25 and was one of the most actively traded with 61 million shares worth $75 million done.

SGX gained 4 Singapore cents or half a per cent to $7.61. DBS Research has maintained a "buy" on SGX, citing improved market sentiment and higher volumes for both the equities and derivatives businesses.

Tung Lok Restaurants slipped 3 Singapore cents or nearly 12 per cent to 22.5 Singapore cents following a profit warning that it expects to report a net loss for the half year ending September.

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