STI regains 3,000 support level

IN a month where bearish attitudes seem to dictate markets, it may be fitting that Asian stocks got a much needed lift in the final trading day of October after what has been the worst month for global markets in over six years.

The lift takes cue from positive earnings releases for the third quarter by American companies on Tuesday, which lifted Wall Street benchmarks and eased fears that rising costs of borrowing may hinder corporate investment.

IG's Pan Jingyi said: "Both US earnings and President Donald Trump's comments on trade with China had been perceived as positive on Tuesday, giving stocks a short-term boost."

Meanwhile, data released on Wednesday showed that in October, China's manufacturing sector grew at its weakest pace in over two years. It did little to dampen investors' moods.

Ms Pan added: "Vows to support the market from regulators in China appear to retain their abilities to pacify investors through the disappointments of the softer-than-expected PMI numbers today (Wednesday) and a yuan that is threatening to tread lower against the US dollar."

CMC market analyst Margaret Yang noted: "Positive market reaction re-affirmed 'sell on expectation, buy on the news', which is getting more common in market dynamics recently."

That said, investors remained cautious as manufacturing figures suggest a weakening Chinese economy from the intensifying trade stand-off with the United States.

Led by the Nikkei's 2.16 per cent gain, key Asian indices - the Kospi, Hang Seng, ASX 200, Shanghai Composite and the Kuala Lumpur Composite - all closed higher.

Singapore shares sang the same tune, with the Straits Times Index (STI) up 52.35 points or 1.8 per cent to close at 3,018.80. Just two of the 30 constituents closed lower on the day.

The STI had closed below its key support level of 3,000 for consecutive sessions since trading ended on Oct 26 at 2,972.02.

Turnover on the bourse stood at roughly 2.27 billion shares worth S$1.48 billion. Advancers greatly outnumbered decliners 259 to 151.

Ms Yang said: "The Singapore market is riding strong tailwinds alongside a broad rebound in Asia markets, with trading volume on the Singapore Exchange securities market hitting 2.27 billion - higher than the daily average volume of the past few weeks."

On a turnover of 52.9 million shares, Genting Singapore was the bourse's most actively traded stock, rising S$0.02 or 2.3 per cent to close at S$0.88.

The STI's biggest gainer - electronics manufacturing services provider Venture Corp - pared losses on Tuesday to close S$0.67 or 4.6 per cent higher at S$15.32.

On the back of positive third-quarter earnings posted on Tuesday after market closure, tech solutions provider AEM Holdings shares finished S$0.045 or 6 per cent higher at S$0.80 on Wednesday.

CGS-CIMB's William Tng upgraded his call on AEM from "reduce" to "hold" as AEM's expected slowdown in FY2019 has been priced in.

Among financials, DBS closed S$0.66 or 2.9 per cent higher at S$23.46, UOB ended S$0.38 or 1.6 per cent up at S$24.38, while OCBC gained S$0.24 or 2.3 per cent to end at S$10.74.

While markets got a reprieve, volatility prevails following the worst monthly performance for the STI since January 2016.

"Event risks are abundant for markets going into November, where items including the Fed meeting and the convening of US and China's presidents could shed light on the two key issues at hand - rising interest rates trajectory and trade tensions," Ms Pan said.

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