Oil price rebound boosts local stocks
LOCAL shares eked out a small gain yesterday, after a rally in crude oil prices over Tuesday night and fresh hopes that Greece's new leaders can reach a deal on its debt with its European lenders.
Those two factors also helped to lift other markets in the region.
The benchmark Straits Times Index rose 9.55 points or 0.28 per cent to 3,417.57.
This was after prices of benchmark Brent crude oil surged 7 per cent to a one-month high at nearly US$58 per barrel on Tuesday night, although they retreated a little yesterday to around US$57 per barrel.
Though crude oil prices are down by about half from last June, the overnight rally could signal that oil prices have bottomed out.
Markets were also buoyed by prospects that Greece can negotiate a deal with its creditors in Europe. It is proposing to swap its debt for bonds that will be repaid only if the Greek economy grows.
If the country does not hammer out a deal with lenders by the end of June, it will be unable to pay back seven billion euros worth of bonds maturing in July and August.
Traders largely seemed to be betting that Greece would manage to do that, though with some caution. Hong Kong gained 0.5 per cent, Tokyo jumped 2 per cent and Seoul went up 0.6 per cent yesterday.
Shanghai fell 1 per cent before the Chinese central bank announced monetary easing last night. The People's Bank of China cut a reserve requirement ratio for banks, in a bid to boost liquidity and stimulate economic growth. This was something that traders have been expecting for a while, though perhaps not so soon.
In Singapore, commodities stocks Golden Agri-Resources and Noble Group were among the most actively traded.
Golden Agri rose half a cent to 42.5 cents on 42.6 million shares traded, while Noble increased 2.5 cents to $1.10 with 26.8 million shares traded.
The oil rally also helped rigbuilder Keppel Corp continue its winning streak. The stock rose nine cents to $8.94. Sembcorp Marine added three cents to $3.13, but smaller offshore stocks such as Ezion and Swiber slipped. Ezion fell three cents to $1.29 and Swiber was down 0.2 cent to 19.4 cents.
DMG Research said in a report yesterday that the energy industry is set to recover soon. "Oil and gas industry players are mostly of the view that we are seeing the bottom of a normal oil and gas business cycle. Amidst the chaos, some companies will emerge stronger," it said.