Business

STI down 0.5% following pullback in US

It caps the day's trading at 3,334.67 with some 1.7 billion shares worth $1.1 billion done

It was almost a given that the local bourse's key Straits Times Index would snap seven straight days of gains to close lower yesterday following the declines in US stocks overnight on Monday.

The STI capped the day's trading at 3,334.67, lower by 15.13 per cent or 0.5 per cent with some 1.7 billion shares worth $1.1 billion done.

Year to date, the STI has put on nearly 16 per cent.

Overnight Monday, the S&P 500 ended 0.4 per cent lower, while the Nasdaq Composite Index and Dow Jones Industrial Average declined 0.6 per cent and 0.2 per cent respectively, weighed down by a drop in technology and industrial shares.

"Although markets seem to be relatively quiet, the CBOE's Volatility Index logged the largest one-day gain in nearly seven weeks, closing above 11 - an indication that option premiums on the S&P 500 are rising, which could be an early sign that investors are protecting their portfolios from a possible pullback," FXTM chief market strategist Hussein Sayed said.

Apart from Singapore and Hong Kong, where the Hang Seng slipped 0.5 per cent, the other major Asian bourses shrugged off Wall Street's soft lead with modest gains.

China's Shanghai Composite closed up 0.2 per cent, South Korea's Kospi finished 0.02 per cent higher while Australia's ASX 200 advanced 0.1 per cent.

Traders will also be holding out to see who US President Donald Trump picks as Fed chair this week as he is close to making a decision.

Among the shortlisted candidates are the hawkish-biased Stanford University economist John Taylor and dovish-biased Fed governor Jerome Powell.

China's closely-watched ruling Communist Party congress wrapped up yesterday, endorsing a second five-year term for President Xi Jinping.

The political appointments may arguably have little impact on prices in the near term but would be bound to affect the longer-term development for Asia's largest economy, said IG Markets' Jingyi Pan.

In the local bourse, losers outpaced gainers with 222 counters down and 202 up.

Banking stocks led the decline yesterday. DBS Bank was down five Singapore cents or 0.2 per cent at $21.90. OCBC Bank slipped five Singapore cents or 0.4 per cent to $11.46 while United Overseas Bank retreated 13 Singapore cents or 0.5 per cent to $24.25.

DBS Research reckoned that UOB, which has lagged its peers year-to-date, is "ready for lift-off" on the back of a property market recovery.

UOB has the largest proportion of property-related loans versus peers - imminent NIM (net interest margin) improvement and an end to asset quality woes. It is due to release its third-quarter results on Nov 3.

SIA fell eight Singapore cents or 0.8 per cent to $10.18. The airline said it has finalised a US$13.8 billion (S$18.8 billion) order for 39 Boeing aircraft for "additional growth and fleet modernisation through the next decade".

First Reit closed unchanged at $1.38. The Reit reported a 0.9 per cent improvement in distribution per unit to 2.14 Singapore cents for the third quarter which OCBC Investment Research said was in line with expectations.

CapitaLand Mall Trust fell one Singapore cent or 0.5 per cent to $2.05 with 15 million shares worth $30 million traded. The trust recently reported its third-quarter results - DPU was unchanged for the period from a year ago at 2.78 Singapore cents. While CMT's results were in line with estimates, RHB Research said it expects rent growth to be flat to slightly negative as retail supply remains high amid changing consumer demand.

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