STI gains 0.3% amid regional rally fuelled by Powell remarks

SINGAPORE shares rose alongside regional bourses as sentiment turned upbeat after Federal Reserve chair Jerome Powell pledged to maintain the recovery in the world's largest economy and mentioned nothing about speeding up the tightening cycle.

The Straits Times Index (STI) rose 8.61 points or 0.27 per cent to 3,254.98, taking the cue from a rally on Wall Street overnight. The STI has begun the year on an impressive note, adding more than 125 points or 4 per cent so far.

The rally in US stocks spurred big jumps in key regional gauges. Japan was up 1.92 per cent while Hong Kong and China added 2.8 per cent and 0.8 per cent, respectively. South Korea, Taiwan and Australia also advanced but Malaysia bucked the general trend and finished lower.

The gains across most key markets come ahead of the release of key US inflation data for December, which most pundits expect to be "hot".

The Fed's monetary policy is the key determining factor for financial markets, Ostrum Asset Management pointed out in a recent report. "The minutes of the last Federal Open Market Committee (FOMC) show a clear change of heart from policymakers. High inflation is the main concern and requires a significant adjustment to monetary policy, including ending asset purchases, three rate hikes in 2022 and a winding down of the balance sheet," it said.

Powell said that the Fed will act to rein in inflation but added he expected inflationary pressures to peak mid-year. He didn't provide any details about when the tightening would start. OANDA Asia Pacific senior market analyst Jeffrey Halley described the central banker's remarks as a "masterful performance...leaving the bowls neither too full nor too shallow, but just right from the financial market's perspective".

Some 1.09 billion securities worth S$1.25 billion were traded in the Singapore bourse. Gainers outpaced losers with 250 counters up and 193 down. Gains were led by OCBC, Jardine Matheson Holdings, Keppel Corp and DBS, which collectively added 9.5 index points to the STI on Wednesday (Jan 12).

AEM Holdings fell S$0.14 or 2.68 per cent to S$5.08. The mainboard-listed advanced chip-testing solutions provider issued a revenue guidance for FY2022 on Tuesday (Jan 11) and said it expects some margin compression due to higher supply chain costs and an increase in research and development spending.

This may be perceived negatively by the market and given the stock's 32 per cent rally in the past 3 months, profit-taking may ensue, said Maybank Securities in a report. The house, however, added that fundamentals are intact and there is room for further positive guidance revisions as the year progresses.

Marco Polo Marine inched up S$0.001 or 3.7 per cent to S$0.028, partly lifted by higher crude prices. Recent news that the integrated marine logistics firm has set up a joint-venture company to expand its offshore and marine business into Taiwan earned the stock coverage by SAC Capital. The house recently said it has a "buy" rating on the counter as it sees more opportunities for the group in the Taiwan wind farm market, as well as revenue growth from higher charter and utilisation rates.