May 10, 2016

    STI's 10-day losing streak ends

    SINGAPORE shares snapped a 10-day losing streak, rebounding yesterday on a positive lead from European futures as oil prices firmed on China's strong crude imports last month.

    A huge wildfire in Canada's oil sand region disrupted oil supplies, also bolstering the price of crude.

    The key Straits Times Index jumped 1.29 per cent or 35.26 points to 2,766.06, led by Singtel.

    The telco, due to announce full-year earnings on Thursday, rose 3.5 per cent or 13 cents to $3.89 on 30.7 million shares traded.

    DBS Bank attributed the recent consolidation in blue chips to a "lacklustre first-quarter results season so far, Singapore's market PE valuation, stocks going ex-dividend and a general lack of positive catalysts". DBS sees the STI range-trading between 2,700 and 2,835 in the weeks ahead.

    "The 'earnings recession' trend continues. To date, for the stocks under our coverage that have released results, the earnings cut is 1.1 per cent quarter on quarter for the financial year 2016 and 0.8 per cent quarter on quarter for full year 2017," it said.

    Traders yesterday digested China's weaker trade figures released on Sunday. Most pulled back expectations of United States interest-rate hikes after non-farm payrolls on Friday showed a slide in jobs growth to 160,000.

    But some Federal Reserve officials maintain two hikes this year are still in the cards.

    "That puts the possibility of a June rate hike in question, and it may be delayed to July," remisier Alvin Yong said.

    ABN Amro in a report yesterday said: "We continue to expect the Fed to remain on hold this year, primarily because of concerns about the weaker pace of growth of the US economy and the uncertainty around the global economy.

    "Although wage growth picked up in this report, this is still insufficient for the Fed to significantly change its attitude to inflation overshooting the target," it added.

    Noble Group was among the most actively traded stocks, plunging 13.6 per cent or 5.5 cents to 35 cents, with 106.4 million shares traded.

    The slump came after its last remaining investment grade credit rating looked to be in jeopardy after Fitch Ratings placed the commodity trader on a negative rating watch.

    Not helping is substantial shareholder Franklin Resources, which pared its Noble stake last Thursday to 5.94 per cent from 6.08 per cent.

    Fitch said its decision was driven by "expectations that Noble will focus more on shorter-term and secured financing to lower financing costs amid a difficult operating environment".

    Other hotly traded stocks included offshore marine firm Vallianz Holdings, which jumped 7.3 per cent or 0.3 cent to 4.4 cents, with 72.2 million shares traded.

    Ezra Holdings fell 6.6 per cent or 0.6 cent to 8.5 cents, with 52.5 million shares traded. Rex International slipped 10.1 per cent or 0.9 cent to eight cents, with 30.5 million shares traded.