Singapore shares gain 0.7% after positive US-China trade comments

POSITIVE remarks from both the US and China on trade matters, which suggest productive negotiations between the two parties over a trade deal lifted spirits, making for a positive showing for Asian equities on Tuesday.

In Singapore, the Straits Times Index (STI) build on a positive start to the week, opening 1.1 per cent higher before pulling back on some those early gains to end at 3,160.67, a gain of 21.52 points or 0.7 per cent. Among other Asia-Pacific indices, Australia, China, Hong Kong, Japan, Malaysia and South Korea all posted gains.

The relationship and sentiment around trade talks have ebbed and flowed but IG market strategist Pan Jingyi noted that a "clear break here would be significant and likely aid in the renewal of the long-term uptrend that had been kept intact through the recent spate of trade escalation".

That said, given how investors have been left disappointed before, it would not hurt to treat any positive development with a pinch of salt. Afterall, the roadblocks to a deal have always revolved around thorny issues.

In Singapore, trading volume stood at 1.02 billion securities, 85 per cent of the daily average in the first nine months of 2019. Meanwhile, total turnover clocked in at S$1.14 billion, 6 per cent over the January-to-September daily average.

Across the market, advancers pipped decliners 185 to 184. Thirteen of the blue-chip index's 30 counters ended in the red.

With the limelight in the local market on conglomerate Keppel Corp after state investor Temasek made a partial offer to acquire a further 30.55 per cent stake in the conglomerate on Monday, it was of little surprise that trading in Keppel shares was heavy.

When trading resumed on Tuesday morning, was quickly the STI's most active counter, soaring S$0.84 or 14.4 per cent to close at S$6.68 on 33.5 million shares traded.

The local banks mostly ended higher. DBS Group Holdings closed up S$0.13 or 0.5 per cent to S$24.91, OCBC Bank finished S$0.04 or 0.4 per cent higher at S$10.71 while United Overseas Bank ended the day at S$25.89, down S$0.06 or 0.2 per cent.

Jefferies Singapore analyst Krishna Guha wrote in a Q3 earnings outlook on the Singapore banking trio that third quarter results are likely "to see a confirmation of pick up in business volumes and softening of margin" and "reveal whether the strength in non-interest income driven by trading and wealth management gains is able to outweigh any weakness in regional asset quality".