Jan 14, 2015

    Positive China trade data eases STI's fall

    UPBEAT trade data from China yesterday helped cushion a drop in local shares as crude oil prices continued to sink.

    The benchmark Straits Times Index opened about 10 points down in the morning, but pared its losses later in the day to close at 3,341.07 - down 3.82 points from Monday.

    The weak opening came after crude oil fell overnight on Monday, following warnings from major banks that prices of the commodity would slip further.

    Goldman Sachs slashed its three-month forecast for Brent crude from US$80 to US$42 a barrel yesterday. Societe Generale also recently cut its Brent estimates for this year from US$70 to US$55 a barrel.

    Their dire predictions sparked a 5 per cent drop in prices of Brent crude traded in London to around US$46 a barrel yesterday, the lowest in more than five years.

    "In a violent move like this, it's impossible to pick the magic number that's the bottom," said Katherine Spector, a commodities strategist at CIBC World Markets in New York, in a Bloomberg report.

    "I'm not going to pick a bottom. Prices will have to go to a level that inflicts maximum pain before the bottom is found."

    The further slump in oil sent Wall Street down on Monday night, with the Dow retreating 0.5 per cent.

    The impact from that decline on the local market yesterday was offset by a rare set of better-than-expected trade data from China.

    China's exports jumped a surprising 9.7 per cent last month from the same month in 2013 due to stronger demand, said official data.

    That was a better showing than the 4.7 per cent growth in China's exports in November.

    The figures lifted both Hong Kong, which climbed 0.8 per cent, and Shanghai, up 0.2 per cent. Tokyo was down 0.6 per cent, however, taking its cue from Wall Street. Seoul shed 0.2 per cent.

    The fall in crude oil dragged down local energy and offshore stocks yet again.

    Noble Group, which trades crude and other products, dived 6.8 per cent or 7.5 cents to $1.025.

    Offshore support services firm Ezion Holdings, which owns liftboats and service rigs used for maintenance work in shallow-water oilfields, fell 5.2 per cent or 6.5 cents to $1.175.

    The major rigbuilders were also affected, but not as badly. Keppel Corp retreated 12 cents to $8.17 and Sembcorp Marine lost six cents to $2.98.