Apr 28, 2015

    STI inches up as US data looms large

    LOCAL shares closed a tad higher yesterday amid choppy trading, paving the way for a volatile week that will likely be swayed by United States data.

    The benchmark Straits Times Index closed 2.85 points or 0.08 per cent up at 3,515.85 to claw back some of the 0.35 per cent decline recorded last week.

    Yesterday's gain came as investors responded to signals from the US last week, when the Nasdaq and S&P 500 both closed at record highs, said Phillip Futures investment analyst Howie Lee.

    "Investors are watching US corporate earnings, which have shown better-than-expected figures. But the improvements seem to come mostly from cost-cutting, so we're not sure how sustainable it is.

    "I think the market will remain volatile this week. My advice is for traders to close their position to avoid uncertainties."

    The US central bank concludes its April meeting on Thursday, and market watchers are anxiously awaiting signals on whether the Federal Reserve will start hiking rates in June. First-quarter economic growth data, another key figure for markets worldwide, will also be announced on Thursday.

    Growth in the US will continue to "hang around the 2.5 per cent range", tipped DBS chief executive Piyush Gupta, who made the comments at the bank's first-quarter earnings briefing yesterday.

    DBS, the first of the three local banks to announce its numbers, impressed with record-high revenue and profit.

    However, DBS' shares closed 19 cents or 0.90 per cent down at $20.89 after the briefing.

    "I think it's just a technical correction - the banking sector continues to merit close attention, supported by rising interbank rates. I expect OCBC and UOB to report record earnings in coming days," Mr Lee said.

    UOB's shares hit a 12-month high, closing 35 cents or 1.42 per cent ahead at $25.05 after a month of gains. OCBC rose three cents or 0.28 per cent to $10.82. Both banks announce first-quarter results on Thursday.

    Other strong performers included Singtel, up seven cents or 1.60 per cent to $4.44, and Olam International, which closed three cents or 1.50 per cent up at $2.03.

    At the other end of the ledger, Singapore Technologies Engineering closed 18 cents or 4.77 per cent down at $3.59, while Sembcorp Marine dropped nine cents or 2.90 per cent to $3.01.

    In other regional markets, Shanghai surged 3.04 per cent to another fresh seven-year high amid expectations of mergers among state-owned enterprises, while Hong Kong had a record close after a 1.33 per cent gain.

    However, Tokyo dropped 0.18 per cent, joined by Kuala Lumpur with a 0.16 per cent drop.