May 30, 2016

    More ups than downs as oil prices recover

    SINGAPORE shares could see more positive news in the coming week as the market's momentum continues to gather pace, say analysts.

    "There is more upside potential than downside for now," said CMC Markets Singapore market analyst Margaret Yang.

    "If you look at Hong Kong and Singapore, both have rebounded from their recent lows," she added.

    "Market sentiment has also improved as we see crude oil challenging US$50 a barrel, so the commodities and resources sector has been doing quite well," she noted, referring to the recent recovery in crude oil prices.

    Ms Yang added that while she remains "quite cautious" on crude prices keeping above the US$50 level, the strong rally has been an encouraging sign for the global economy.

    "It means it will be less stressful for a lot of companies this year, especially those in the offshore and marine sector. Even banks will stand to benefit because default rates are likely to drop," she said.

    The Straits Times Index closed at 2,802.51 points on Friday, up 1.4 per cent for the week - its third straight week of gains.

    One of the highlights last week was the Singapore Exchange's announcement that it is in exclusive talks to buy London's Baltic Exchange. Market watchers have valued the potential sale to be about US$100 million (S$138 million).

    On Wall Street, the Dow Jones Industrial Average climbed 0.25 per cent on Friday, after United States Federal Reserve chair Janet Yellen implied that higher interest rates could be rolled out soon.

    Investors appear to have been warming up to the idea of the upcoming rate hike.

    "Investors are checking the pulse of the economy and the numbers that came out this week indicate the economy can handle the stress of higher rates," Jim Davis, regional investment manager for The Private Client Group of US Bank, told Bloomberg.

    Closer to home, China will release manufacturing data and industrial profits on Wednesday, while Japan will unveil figures on retail trade, factory output, capital spending and the jobless rate through the week.

    The US markets are closed today for the Memorial Day holiday.