Feb 26, 2015

    STI rises as Wall Street leads the way


    STOCKS in Asia-Pacific ended mixed yesterday, despite another record close on Wall Street after United States Federal Reserve chief Janet Yellen dampened speculation of a rate rise before summer and as euro-zone finance ministers backed Greek reforms.

    The Straits Times Index yesterday rose 3.22 points to 3,440.83 and the entire market recorded 240 rises against 193 falls, in response to all-time highs recorded by Wall Street's major indices overnight.

    These came as the Fed was in no hurry to raise its short-term interest rates following Dr Yellen's testimony to the Senate Banking Committee.

    Jardine Matheson provided the biggest positive support to the STI, and Genting Singapore the biggest drag. The latter was also the day's most active stock - disappointing earnings resulted in the counter losing 6.5 Singapore cents or 6.2 per cent to $0.98 with 130.3 million shares traded.

    Sydney rose 0.3 per cent, or 17.92 points, to 5,944.9, and Seoul added 0.73 per cent, or 14.35 points, to finish at 1,990.47.

    Tokyo closed 0.1 per cent, or 18.28 points, lower at 18,585.2 as investors took profit after a five-day winning streak.

    "The two potential international risk events for markets had positive outcomes," said Ric Spooner, chief market analyst at CMC Markets in Sydney.

    "Janet Yellen's testimony moved expectations for a rate hike out in time, while the boxes were ticked to cement a four-month funding programme for Greece."

    Chinese markets also rose at the open on the first day of trade after the week-long Chinese New Year holiday.

    But Shanghai quickly reversed course to close down 0.56 per cent despite a survey showing Chinese factory activity expanded this month, snapping two consecutive months of contraction.

    Hong Kong, meanwhile, added 0.11 per cent, or 28.21 points, to close at 24,778.28.

    Global markets zeroed in on the start of Dr Yellen's two days of congressional testimony, when she signalled that the Fed was preparing for a rate rise this year but hinted that such a move would not come before June.

    "The reaction of the market (to Dr Yellen's testimony) is weaker dollar, lower yields, higher equities - the classic reaction you'd see from a slightly dovish Fed," Omer Esiner, chief market analyst at currency brokerage Commonwealth Foreign Exchange, told Bloomberg News.

    European stocks also rose strongly, with a record close in London as euro-zone finance chiefs backed a four-month extension of Greece's bailout.

    Despite reservations expressed by the International Monetary Fund and European Central Bank over the plan, euro-zone ministers also signed off on promised reforms which Greece's new left-wing government submitted to its international creditors.

    Several parliaments, including in pro-austerity Germany, must now approve the extension before the current bailout expires on Saturday, while key details will be hammered out in the coming weeks.