Singapore stocks rally on dovish Fed talk; banks, Reits gain

SINGAPORE stocks climbed strongly on Thursday, with the Straits Times Index advancing 0.9 per cent to 3,121.63 just before lunchtime at 11.04am, on a tide of overnight dovish Fed comments that lifted all boats.

Gainers outnumbered losers 183 to 106, with local banks among the bourse's top gainers. DBS was up 1.84 per cent to S$24.31 while UOB gained 1.65 per cent to S$25.23.

Reits also rallied, posting gains above one per cent. Ascendas Reit rose 1.16 per cent to S$2.61, and ParkwayLife Reit added 1.53 per cent to S$2.66.

Overnight, US equities registered their biggest intraday rally since March, following US Federal Reserve chair Jerome Powell's dovish speech last night. He said current interest rates were 'just below neutral', inducing market participants to pare down expectations for further rate rises going into 2019, although a December hike is still likely to take place.

Although a key overhang has been addressed, Asian markets still have to contend with this Friday's G20 summit, largely viewed as an opportunity for China and US to break a negative spiral in financial markets.

CMC's Margaret Yang said given this is a "delicately prepared, high stakes meeting between the two countries' top leaders, any negative surprise like what we saw in the previous Apec summit is unlikely to repeat in Buenos Aires."

She thinks that markets have not fully priced-in the possibilty of a breakdown in talks and further tariffs on all the remaining Chinese goods. Hence, stock markets will take a hit if talks break down and result in a full-tariff scenario.

Early movers in the region had kicked off with strong starts of about 0.9 per cent for Sydney and Tokyo, but markets are expected to climb cautiously for the rest of the day.

On currencies, the US dollar index left its two-week high of 97.30, sinking about half a per cent to 96.77 on the prospect of fewer US rate hikes next year. The euro rebounded 0.68 per cent against the greenback to 1.136 this morning, while the British pound advanced 0.65 per cent against the USD to about 1.282. The pound is expected to remain subdued before the Dec 11 Brexit vote.