Singapore stocks extend gains ahead of US inflation report; STI up 0.4%

SINGAPORE shares extended their advance for the third consecutive day on Wednesday (Jul 12) following overnight gains on Wall Street.

This comes amid heightened expectations that the soon-to-be released US inflation figures would indicate moderating price pressures.

The Straits Times Index (STI) finished 11.52 points or 0.4 per cent higher at 3,175.36. Elsewhere, key benchmarks in Japan and China fell, while those in Hong Kong, South Korea, Taiwan, Australia and Malaysia closed higher.

“The US inflation data release is set to heavily influence the outlook on future Fed (Federal Reserve) rate hikes. As things stand, a July hike is all but priced in, though Fed Funds futures expect just about a one-in-three chance of an additional hike for the rest of the year,” said Han Tan, chief market analyst at Exinity Group.

For now, markets are anticipating further evidence of softening inflationary pressures.

Tan continued: “Should the CPI numbers come in below market expectations, that could cut the Fed some slack in this rate-hike cycle. Such a narrative may bolster risk assets, while heaping more downward pressure on the US dollar that’s wilting as markets doubt whether the FOMC’s two projected hikes will indeed materialise.

“However, should US inflation remain stubbornly elevated, that should embolden the FOMC (Federal Open Market Committee) hawks while prompting markets to ramp up bets for that post-July rate hike. Such repricing should offer some relief for dollar bulls while prompting the likes of gold and oil to pare recent gains.”

On the home front, some two billion securities worth S$1.1 billion were traded. Gainers beat losers, with 353 counters up and 227 down.

Trading in the shares of Thomson Medical Group was halted pending an announcement. The group is proposing to buy Far East Medical Vietnam (FEMV), the owner and operator of a range of healthcare facilities in Vietnam, for some US$380 million.

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ICP was the day’s second-most active counter with 48 million shares done. The Catalist-listed company’s substantial shareholder Aw Cheok Huat has lobbed a mandatory conditional cash offer for the company’s shares at S$0.007 apiece after raising his stake in the firm. The counter ended S$0.002 or 22.2 per cent lower at S$0.007, after it resumed trading on Wednesday following a halt the previous day pending the announcement.

UOL Group gained S$0.06 or nearly 1 per cent to S$6.66. The Housing and Development Board on Tuesday announced the award of a mixed-use land parcel in Tampines to a joint venture between a UOL-Singapore Land consortium and CapitaLand Development at a S$1.21 billion tender price.