STI slips amid fresh oil-price worries

WEATHER BOON? Workers collecting oil palm fruit at a Sepang factory. "Volume of crude palm oil futures was seen gaining recently as markets bet on the impact of poor weather conditions on plantations," says CMC Markets analyst Teo.


    May 21, 2015

    STI slips amid fresh oil-price worries

    THE Singapore market continued its poor run of form this week ahead of the release of the United States Federal Reserve's latest meeting minutes, with a fresh fall in oil prices also spooking investors.

    The Straits Times Index dropped for the third straight day, closing 14.36 points or 0.42 per cent lower at 3,439.68. Volume stayed below the $1 billion level, with only $989.5 million worth of shares changing hands.

    The fall on the local market echoed the mixed performance on Wall Street. The Dow Jones Industrial Average made a marginal 0.07 per cent gain overnight, as upbeat sentiment over strong US April housing data was offset by worries that the Fed might decide to raise interest rates sooner than expected.

    Investors are also looking at Europe, where debt negotiations with Greece are showing no signs of resolution.

    Meanwhile, the local market has simply run out of reasons to cheer, said CMC Markets analyst Nicholas Teo.

    "Dismal is how I would describe the market now. It's really not looking good at all as there's no real mover on the upside. The oil and gas sector particularly suffered after the over 3 per cent dip of Brent futures on Tuesday.''

    As a result, energy and offshore marine blue chips took a hit, with Keppel Corp closing 13 cents or 1.47 per cent lower at $8.70. Sembcorp Marine also pared four cents or 1.33 per cent to close at $2.96.

    The top losing blue chip was StarHub, which shed nine cents or 2.13 per cent to close at $4.13. The telco operator has been falling since Friday, when it announced a 12.4 per cent year-on-year decline in first-quarter net profit.

    On the other end of the ledger, Hongkong Land Holdings gained the most, jumping 12 US cents or 1.46 per cent up to US$8.33 (S$11.13), while CapitaLand added three cents or 0.83 per cent to close at $3.63. The two counters may have been favoured for their Greater China portfolio, Mr Teo said.

    "But the key theme that I'm eyeing now is the palm oil sector. Volume of crude palm oil futures was seen gaining recently as markets bet on the impact of poor weather conditions on plantations.''

    Crude palm oil producer First Resources rose eight cents or 4.12 per cent to close at $2.02. Golden Agri-Resources ended flat at 42 cents, but gained by as much as 2.4 per cent through the day.

    Overseas, Tokyo rose 0.85 per cent to a 15-year high following the announcement of a surprise 2.4 per cent economic growth in the first quarter. Shanghai rose 0.65 per cent while Hong Kong dropped 0.39 per cent.

    The pace of economic recovery in Japan is not yet certain despite the latest growth figure, Mitsubishi UFJ Morgan Stanley Securities senior investment strategist Norihiro Fujito told Reuters, citing lower-than-expected business investment volumes.