Jun 08, 2016

    Asian stocks up on hopes of delayed rate hike

    ASIAN markets racked up solid gains yesterday on hopes that expected interest rate hikes in the United States will be delayed.

    The rally mirrored the upbeat sentiment at Wall Street, which rose 0.64 per cent overnight after Federal Reserve chair Janet Yellen said she remains optimistic on the outlook for US economic growth, and that rate increases should come "gradually".

    The Straits Times Index (STI) added 16.81 points, or 0.59 per cent, to 2,848.09.

    Hong Kong led the region-wide rally with a 1.42 per cent gain, while Tokyo climbed 0.58 per cent and Seoul jumped 1.3 per cent.

    But Shanghai was nearly flat, inching up just 0.07 per cent ahead of May trade data out today.

    "Singapore actually did quite well today; it managed to maintain its strength through the day," said remisier Desmond Leong.

    "Markets are taking in the possibility of the rate hike being pushed to July, when the Fed had previously been gearing them up for one in June," he noted. "But June or July - it's not a lot of difference. Eventually the Fed will have to raise it, probably once or twice this year. It's just a matter of when."

    Of the 30 STI constituents, 18 closed higher while six fell into the red.

    Oil and gas-related plays were among the day's biggest winners as crude prices held steady at more than US$50 a barrel. Sembcorp Marine surged 10.5 cents or 6.6 per cent to $1.685 while parent firm Sembcorp Industries jumped nine cents or 3.2 per cent to $2.90. Keppel Corporation rose eight cents or 1.5 per cent to $5.46.

    However, Maybank Kim Eng said in a recent report that it remains bearish on the offshore and marine sector given that most companies do not expect a meaningful recovery in activities before 2017, noting it is "not time to turn positive on the builders if their clients continue to be restrained".

    Those in the commodity sector also did well: Golden Agri-Resources gained one cent or 2.6 per cent to 39.5 cents while Wilmar International advanced four cents or 1.2 per cent to $3.42.

    On the other hand, StarHub lost five cents or 1.4 per cent to $3.60 and Singapore Airlines eased eight cents or 0.8 per cent to $10.57.

    Turnover across the bourse came in at 1.69 billion units worth $945.4 million.