Aug 28, 2015

    STI up 2.5% as rate-hike fears recede

    SINGAPORE stocks reversed course for the fourth time in four days to gain 2.5 per cent, or 72.43 points, for a 2,945.43 close yesterday, following dovish remarks by a United States central banker.

    About 1.96 billion shares worth $1.61 billion in total changed hands, reported The Business Times.

    The most actively traded stock was Noble Group, which jumped 6.5 cents, or 14.4 per cent, to close at 51.5 cents with 137.4 million shares traded.

    The Big Three banks all rose, with DBS Group Holdings adding 2.5 per cent, or 44 cents, to finish at $18.09.

    OCBC Bank increased by 3.2 per cent, or 28 cents, to close at $9.17, while United Overseas Bank headed out at $19.75 after rising by 2 per cent or 39 cents.

    Gainers outnumbered losers 459 to 61, or about eight up for every one down.

    Equities in Wall Street, Asia and Europe were boosted after one of the heads of the New York branch of the US Federal Reserve, William Dudley, declared that the recent China turmoil had weakened the case for a US interest rate rise next month, reported Agence France-Presse.

    World markets had suffered a torrid start to the week on "Black Monday", when Shanghai collapsed by almost 8.5 per cent and sparked fears that China's slowdown could herald a global recession.

    Concerns that the US could raise rates as early as next month have also been piling pressure on world markets.

    New York snapped a six-day losing streak on Wednesday after Mr Dudley's remark.

    The S&P 500 surged 3.9 per cent, the Dow Jones Industrial Average added 3.95 per cent and the Nasdaq Composite was up a heady 4.24 per cent, with sentiment bolstered by upbeat US durable goods orders.

    Asian equities took their cue from the Wall Street performance yesterday, rallying after several tumultuous days.

    Shanghai soared 5.34 per cent to end the worst five-day rout for almost two decades, cheered partly by this week's interest rate cut from the People's Bank of China aimed at boosting the world's second-largest economy.

    Shanghai brokers said there was speculation over state buying or a possible top-level meeting of the State Council, or Cabinet, which could detail more measures to support the market.

    Hong Kong shares hurtled 3.6 per cent higher while Tokyo gained 1.08 per cent, Sydney added 1.17 per cent and Seoul rose 0.73 per cent.

    Malaysian shares closed higher yesterday, with the Kuala Lumpur Composite Index gaining 21.33 points to 1,601.7.

    But investors cautioned that the rout on Monday, which wiped US$8 trillion (S$11.2 trillion) off world shares in just over two weeks and battered commodities and emerging market currencies, was far from over.

    Meanwhile, oil prices jumped more than 4.5 per cent yesterday after the rally in equity markets and an unexpected fall in US crude inventories, reported Reuters.