Business

STI up 41 points on higher oil prices

Regional peers also enjoy gains; US stocks also finished higher on upbeat earnings

The Singapore bourse rose for the third straight day yesterday, buoyed by oil prices that hit multi-year highs and an upbeat assessment of the US economy in a Federal Reserve report.

Easing geopolitical tensions over Syria and North Korea and broadly positive corporate earnings out of the US also helped boost risk appetite for equities.

The key Straits Times Index jumped 40.91 points or 1.15 per cent to finish at 3,598.73.

Its regional peers also enjoyed gains across the board with the key indices in Japan, China, Hong Kong, Taiwan, South Korea, Australia and Malaysia closing higher.

Overnight on Wednesday, US stocks finished mostly higher on upbeat corporate earnings and a surge in energy stocks but the Dow closed marginally lower, dragged down by IBM's disappointing outlook.

The US Federal Reserve's Beige Book said robust business borrowing, rising consumer spending, and tight labour markets signalled that US economy was on track for continued growth, but it also highlighted tariffs and trade war risks.

The US yield curve made headlines once again after a top US Federal Reserve official expressed worries about the flattening yield curve trajectory of US Treasury notes, which is deemed a recession indicator.

"While inversion has yet to occur, the probability adds this to one for the watch list for equity market gyrations," said IG markets analyst Jingyi Pan.

This is happening at a time when global debt is at historic highs, according to the IMF.

"High debt does not increase the chances of things going wrong for the economy. What high debt does is make the consequences of things going wrong in the economy considerably worse," said ING's chief economist and Asia Pacific research head Rob Carnell.

"Rising US debt levels are perhaps one of the strongest reasons for concluding that what is wrong with the yield curve story, is not expectations for Fed tightening, which seem broadly on the mark, or the appropriateness of that policy, which seems both restrained and reasonable to my mind, but the yield and expectations of that yield on longer-dated debt itself," he added.

Oil prices extended their gains following data on falling crude inventories and optimism over the global economy. While the elimination of oversupply is a critical factor pushing up oil prices, ForexTime chief market strategist Hussein Sayed said a "significant risk premium" was being priced in, specifically the fear of supply disruption from the Middle East and possible renewed sanctions on Russia and Iran.

Turnover in the Singapore bourse came in at 1.6 billion shares worth $1.4 billion versus Wednesday's 2.2 billion shares worth $1.5 billion as gainers outpaced losers with 243 counters up and 182 counters down.

Gains were led by banking stocks with DBS Bank and United Overseas Bank up 1.9 per cent and OCBC Bank rising 1.6 per cent. Ezion Holdings once again topped the most active list with 92 million shares worth $16 million traded.

The counter extended its losses since it resumed trading on Tuesday, slipping 0.5 cent or 2.8 per cent to 17.2 cents.

Noble Group retreated 0.8 cent or nearly 7 per cent to 10.8 cents. The embattled commodities trader buckled under pressure from criticism over its debt restructuring plan and said it would drop a provision from its proposal that penalised shareholders voting against the plan.

ComfortDelGro inched up eight cents or 3.7 per cent to $2.24. The transport giant revealed yesterday that it was expanding its British operations in a £1.2 million (S$2.2 million) acquisition of London taxi circuit operator Dial-a-Cab.

For full listings of SGX prices, go to http://btd.sg/BTmkts