Singapore shares close lower as banks, Singtel drag STI down 40 points to 2,900

HAVING gained 152 points in nine trading days leading up to Friday last week, the Straits Times Index (STI) fell for the second consecutive session when it dropped 40.15 points to 2,900.28 on Monday.

Low volume is often a problem in the local stock market and so it was the case again when a paltry 864 million units worth S$820 million were traded, down from Friday's S$1 billion.

Other than volatile oil prices - although oil actually rose on Monday - and a soft day for Hong Kong, China and the Dow futures, there were no other readily apparent reasons for the selling here.

At 5pm, the Dow futures traded 70 points in the red; however, because the STI bounced more than 10 points off its intraday low just before 5pm, some traders thought Wall Street may not weaken by as much as initially thought.

Observers also said that they thought the sharp rise of the previous fortnight had been due to hurried short-covering triggered by a rebound in oil from US$30 to US$40 per barrel, and now that this has run its course, weakness is to be expected.

Whatever the reason, the broad market ended with only 131 rises versus 304 falls, excluding warrants. Volume done in the 30 STI components amounted to S$537 million, which was 65 per cent of the entire day's takings.

The banks and Singtel were the main drivers during the STI's rise so it came as no surprise that these were the counters that led the index down.