STI rises on hopes of low interest rates
THE local stock market got a boost yesterday after Wall Street rose on hopes that interest rates may stay low for longer.
The benchmark Straits Times Index rebounded 0.39 per cent, or 12.38 points, to 3,224.03 points after it fell 0.45 per cent on Tuesday.
Investors widely expect the United States Federal Reserve to announce that it will end its monetary stimulus as the US economy recovers. However, it is also expected to say that it is in no hurry to raise interest rates.
Expectations of prolonged cheap liquidity plus optimism over stronger corporate earnings buoyed Wall Street, with the S&P 500 jumping 1.2 per cent overnight.
Markets in Asia took their cue from that: Hong Kong's Hang Seng Index rose 1.3 per cent, Tokyo's Nikkei index and Shanghai both gained 1.5 per cent while South Korea jumped 1.8 per cent.
"Certainly some of the numbers coming out of the US and Japan have been a lot better than expected," said Sean Darby, chief global strategist at Jefferies Group in Hong Kong, in a Bloomberg report.
The Fed "have everything as settled as they possibly could have at the moment. It's a benign environment".
In Singapore, lifestyle group Osim International was among the most traded stocks after it posted a worse-than-expected drop in earnings on Tuesday evening.
The stock plunged 14 per cent, or 31.5 cents, to $1.935 with 30.2 million shares changing hands.
"Even massage chairs cannot defy gravity," said brokerage DMG Research in a report yesterday, noting that Osim's results were a "big miss...it is not likely to achieve earlier forecasts".
Though the business is "fundamentally sound", the operating environment remains weak, it added.
OCBC Investment Research said in a report yesterday that since Osim was likely to "continue its aggressive expansion plans for TWG Tea, we expect cost pressures to remain in the foreseeable future, although we are still optimistic on its medium- to-long-term contribution to Osim's bottomline".
Mapletree Greater China Commercial Trust, which holds a mall in Hong Kong, gained half a cent to 96 cents.
"Management assured us that it does not expect its performance to be adversely affected by the Hong Kong demonstrations. In fact, some of its F&B (food and beverage) tenants actually saw an increase in reservations as some consumers switched locations from the affected areas," OCBC Investment Research said in a report yesterday.