When bad news is good

THE Straits Times Index (STI) eked out a 12.34-point gain over the week to finish at 3,205.24 yesterday. This was bolstered by a strong start to the week as penny stock activity returned and the market turned optimistic about the continued stimulus from the Federal Reserve over the near future.

In the twisted logic of traders, the market rose in anticipation of anaemic September numbers for the US job situation - only 148,000 new jobs instead of the expected 180,000 - which were released on Wednesday. "This weak set of US labour market data has reinforced market speculation that the Fed would have to maintain its accommodative stance for longer," an OCBC Bank report said yesterday.

Now, the Fed is tentatively expected to keep propping up the economy with its US$85 billion in monthly monetary stimulus until next March. By the middle of the week, however, concerns about a pullback in China denied the STI its sixth consecutive rise.