ONCE again, it appears that "bad economic news is good for stocks" - Wall Street has rebounded strongly ever since the release of a weak September jobs report last Friday since this suggests that the US Federal Reserve might not raise interest rates any time soon. On Wednesday, a 130-point surge in the Dow futures contract helped push the Straits Times Index (STI) up for a third consecutive session, this time by 64.4 points or 2.2 per cent to 2,961.81. The STI has now risen 169 points or 6 per cent since the start of the week.
Leading the way were the three banks, and in keeping with daily trading over the past fortnight, the bulk of dollar volume was done in index stocks - the 30 STI components contributed S$1.2 billion or 75 per cent of the entire market's S$1.6 billion. Unit volume in the meantime was concentrated in penny stocks, with the two billion units that were traded averaging S$0.80 in value per unit. Excluding warrants there were 352 rises versus 98 falls.
Wall Street's rebound in the wake of a weak jobs report last Friday has provided the main impetus for gains here as the market now believes that the US Federal Reserve may not raise interest rates any time soon. Also helping has been a relatively stable China market - on Wednesday the Hang Seng rose 3 per cent and the Shanghai Composite Index gained 0.5 per cent.