Jun 11, 2015

    Fed meeting may put lid on STI rebound

    SINGAPORE shares rebounded yesterday, after a four-day retreat that sent the market to its lowest level in six months.

    But analysts fear the rise is not sustainable ahead of the next Federal Reserve meeting next week.

    The Straits Times Index (STI) closed 30.64 points or 0.93 per cent higher at 3,325.77, stemming a slide that took the benchmark below the 3,300 support level for the first time since January on Tuesday.

    "But I suspect this is just a technical rebound due to the strong support for the index around the 3,300 level. The local market may face selling pressure again in the coming days, ahead of the Federal Open Market Committee (FOMC) June meeting next week," said Phillip Futures investment analyst Howie Lee.

    The FOMC meeting on June 16 and 17 is a key market event that investors worldwide will be watching for clues on the timing of a United States interest rate hike.

    Amid the interest rate talk, Wall Street stayed bearish, with the Dow Jones Industrial Average dropping 0.01 per cent overnight after a hectic trading day.

    And there is not much to cheer about at home, Mr Lee noted.

    "There's no catalyst that we can expect to drive a firm rebound for the market, not when economic volatility is pressuring demand for goods and services, which is bad news for Singapore's open economy," he said.

    Brent crude futures rose yesterday to a two-week high of US$66.36 a barrel, following an American Petroleum Institute report that showed a sharp drop in US inventories.

    SembCorp Marine rose the most among blue chips as a result, closing 14 cents or 5.05 per cent higher at $2.91. It was rebounding from a week of slides that took it to a full-year low of $2.77 on Tuesday.

    Other oil and gas plays also gained, with Keppel Corp closing two cents or 0.24 per cent up at $8.41, while Ezion Holdings, outside the STI, ended four cents or 4.04 per cent higher at $1.03.

    Banking stocks did well again, with DBS Group Holdings adding 51 cents or 2.5 per cent to $20.93, OCBC gaining 11 cents or 1.11 per cent to $10.06, while United Overseas Bank rose 23 cents or 1 per cent to close at $23.15.

    But Noble continued its drop, losing the most among the blue chips yesterday. It closed 1.5 cent or 2.27 per cent down to a new 52-week low at 64.5 cents.

    Outside the STI, Q&M Dental Group put in a strong session, jumping five cents or 6.71 per cent to 79.5 cents. The mainboard-listed healthcare play has recently announced plans to expand in China through clinic acquisitions and partnerships.

    In overseas markets, Hong Kong dropped 1.12 per cent and Shanghai ended 0.15 per cent lower, as sentiment was somewhat muted after MSCI deferred the inclusion of yuan stocks in its emerging-market index. Tokyo closed 0.25 per cent down, but Kuala Lumpur rose 0.38 per cent.