STI bounces back on two words from Fed
TWO words were all it took to give beaten-down stocks the boost they needed yesterday.
The jolt of optimism centred on investors believing that the United States Federal Reserve will pledge to keep interest rates low for a "considerable time" when its two-day policy meeting ends early this morning, Singapore time.
The words first appeared in the Fed's minutes in December 2012 and have served as a green light for investors to keep spending in the cheap money era.
Worries that the Fed could remove the phrase in preparation of an eventual rise in interest rates plagued the market all this week but those concerns faded and shares took the hint yesterday.
The Straits Times Index (STI) snapped a three-day losing streak to close 23.86 points or 0.73 per cent higher at 3,296.48.
CMC Markets analyst Desmond Chua said: "Investors expect the Fed to outline recent improvements in the economy without significantly changing their rhetoric around guidance."
A report that China's central bank would inject 500 billion yuan (S$103 billion) into the top five state-owned banks to increase business lending also helped lift stocks.
Shares traded in the green all day with about 1.34 billion shares worth $852.2 million changing hands.
There were 266 gainers versus 133 losers while 396 shares were unchanged.
Technology firm Singapore eDevelopment was the top volume counter, with 157 million shares swopping hands as the share closed 0.1 cents down at 0.3 cents.
Fellow penny stock Blumont also saw plenty of action but closed unchanged at 3.3 cents with 25.6 million shares traded.
The mining firm announced yesterday that it has extended the offer period for Australia-listed Merlin Diamonds from Sept 30 to Feb 13 next year to give it more time to prepare for a shareholders' circular seeking their approval for the deal.
Blue chips were back in favour after taking a battering earlier in the week.
The Jardine group of firms and the banks were also up.
Jardine Matheson rose 24 US cents to US$61.97, Jardine Strategic gained 20 US cents to US$36.50 while Jardine C&C gained 23 cents to $43.40.
DBS increased 13 cents to $18.24, OCBC rose 11 cents to $9.72 and United Overseas Bank crept up three cents to $22.54.
Keppel Corp gained 11 cents to $10.57 after it won a US$227 million (S$287 million) contract from Qatar's Gulf Drilling International.
OSK-DMG analyst Lee Yue Jer kept his buy call on Keppel, saying: "This contract marks the fifth jack-up contract from Gulf Drilling International, showing the reliability of the KFELS B class rigs."