STI climbs 17 points, brushes off UK election outcome
Pound takes a beating on action-packed day
What a day! The outcome of the UK's snap election was disastrous for British Prime Minister Theresa May, with the pound suffering a beating.
But evidently not so for the local bourse, which lapped up a second straight day of gains.
The key Straits Times Index (STI) gained 17.14 points or 0.5 per cent to 3,254.19 yesterday with several key Asian bourses following suit.
Japan's Nikkei 225 added 0.5 per cent, China's Shanghai Composite Index rose 0.3 per cent, South Korea's Kospi grew 0.8 per cent while Malaysia's KLCI was up 0.2 per cent.
"It appears that investors are treating the UK election as an independent Brexit/Britain issue, which is something that will lead to more concern for the UK and its economy than impact financial markets elsewhere," said FXTM vice-president of market research Jameel Ahmad.
The trading day in Asia began with the unfolding of an unexpected outcome in UK polls and one that markets feared - a hung Parliament with no party commanding an overall majority.
This means further political instability in the UK, and this is happening less than a year after the country voted to leave the European Union and triggered Brexit fears.
The market will be trying to get to grips with two competing narratives with the hung Parliament, said Mr Matthew Jennings, Fidelity International's equities investment director.
"The old truism 'the market hates uncertainty' is likely to trigger currency and market volatility.
"Secondly, assuming that the Scottish National Party or the Liberal Democrat Party plays a significant role in any coalition, a second Brexit referendum suddenly becomes a real possibility for the first time," he said.
Despite volatility, he expected the market to likely wait and see what sort of government emerges before reacting.
There were two other events that traders kept watch over.
The first is fired FBI director James Comey's testimony before US Congress in relation to Russia's meddling in its presidential election.
It was eye-opening, but did not trigger a sell-off in US equities, which instead closed little changed.
The other was the European Central Bank meeting, where it highlighted that further interest rate cuts were unlikely while upgrading the growth outlook.
These events kept the market on tenterhooks for much of the week, and the market's relief that they were over may have manifested in yesterday's gains.
Week on week, the STI gained 14.18 points or 0.4 per cent, taking year-to-date performance to a gain of nearly 13 per cent. Turnover came in at two billion shares worth $1.1 billion.
Gainers outpaced losers with 247 counters up and 203 down.
Banks were chief gainers with DBS Bank up 25 cents or 1.2 per cent to $20.72. OCBC Bank added eight cents or 0.8 per cent to $10.68 while United Overseas Bank closed 28 cents or 1.2 per cent higher at $23.60.
Sentiments could have been buoyed by Fitch Ratings remarks that based on a stress test, Singapore's three banks were strong enough to withstand a sharp deterioration in their exposure to the flagging offshore support vessels sector.
Online investment products distribution platform iFAST Corporation jumped 14 cents or 17 per cent to 96.5 cents on news that it was being admitted as a Singapore Exchange securities trading and clearing member.
This article appears in The Business Times today. For full listings of SGX prices, go to http://btd.sg/BTmkts