STI puts on 0.3% as traders look for leads

This article is more than 12 months old

It could make headway towards 3,600, but analysts caution selling pressure will likely appear then

Amid a lack of data leads at home and in the region, share prices in the local bourse stuck to a familiar trajectory - upwards - and snapped a two-day losing streak since it broke out of the 3,600 psychological mark last week.

The gains were logged as the local bourse awaited further direction from the United States while staying inspired by Wall Street's higher close last Friday.

The benchmark Straits Times Index (STI) rose 9.93 points, or 0.3 per cent, to finish at 3,577.07 yesterday.

While analysts expect the STI to make headway towards the 3,600 level again, they expect to see selling pressure once it gets there.

But this will likely be a "short, temporary correction, which allows profit-taking and hand-changing activities", said CMC Markets' Margaret Yang.

"This week, there is nothing much on the earnings calendar so overseas market movement is likely to dominate the local market.

"A technical correction is possible but is unlikely to change the broader picture of the bull market," she said, adding the immediate support level of STI could be found at around 3,500 points.

Asian markets closed mixed with key benchmarks in Japan, Hong Kong and China closing lower while Taiwan, South Korea, Australia and Malaysia saw gains.

Oil continued to flirt with US$70 per barrel.

"It remains to be seen if prices are able to settle above this much-watched level with the latest move up. Global growth optimism, the bullish market mood and technical momentum still provide robust support," said Julius Baer's head of macro and commodity research Norbert Rucker.

"We still believe that prices above US$60 per barrel project a too rosy fundamental picture."

Plenty of leads could come from the US this week.

US President Donald Trump will deliver his first State of the Union address to Congress today.

"Although he is highly likely to declare a victory over the tax overhaul, and how his actions boosted the American economy and stock returns, investors will be focused on any details surrounding the infrastructure bill, trade tensions and border wall funding. So expect some volatility as he speaks," said ForexTime chief market strategist Hussein Sayed.

The week will also see the last Federal Reserve monetary policy meeting chaired by Ms Janet Yellen.

While the Fed is largely expected to maintain the status quo, Maybank FX Research sees a "mild risk" of Ms Yellen making a move on rates to end her term.

"With growth and inflation gaining traction, markets are likely to take a 25 basis points rate increase in their stride even if it is a surprise," the house added.

On the home front, some 2.3 billion shares worth $1.3 billion changed hands yesterday, against last Friday's 1.6 billion shares worth $1.2 billion.

Gainers outpaced losers with 238 counters up and 208 counters down.

Gains were led by Keppel Corp, which climbed 23 Singapore cents, or 2.7 per cent, to $8.86 as traders looked beyond its first quarterly loss announced last week that was led by hefty fines and costs resulting from the bribery scandal in Brazil.

Noble Group closed unchanged at 26 Singapore cents. It announced yesterday that it has reached an agreement to restructure its debt.

Viva Industrial Trust gained 1.5 Singapore cents, or 1.6 per cent, to 95 Singapore cents, while ESR-Reit closed unchanged at 57 Singapore cents.

Trading in both counters resumed midday following the announcement of a proposed merger to create a sizeable and diversified Reit.