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Singapore stocks: STI resumes Thursday afternoon at 3,315.08, up 0.8% on day

SINGAPORE shares resumed trading in positive territory on Thursday afternoon in line with the rest of Asia, as Wall Street stocks climbed overnight after the US Federal Reserve took on a more dovish stance on interest rates.

The Straits Times Index gained 26.91 points, or 0.8 per cent to 3,315.08 as at 1.08pm. Gainers outnumbered losers 172 to 139, after about 869.3 million securities worth S$640.5 million changed hands.

Among the most heavily traded by volume, Singtel advanced 1.5 per cent, or five Singapore cents to S$3.43 on a cum-dividend basis, with 23.5 million shares traded, while Genting Singapore rose 2.8 per cent, or 2.5 Singapore cents to 93 cents, with 22.7 million shares traded.

Other active index stocks included CapitaLand Mall Trust which rose 0.8 per cent, or two Singapore cents to S$2.59, and Ascendas Reit which gained 0.7 per cent, or two cents to S$3.01.

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Banking stocks also climbed. DBS gained 1.7 per cent, or 44 Singapore cents to S$25.87, OCBC rose 1.2 per cent, or 13 cents to S$11.31 and UOB added 0.9 per cent, or 24 cents to S$26.38.

In a report on Thursday morning, OCBC Investment Research noted that UOB is still a "buy", and remains "inexpensive", even after its shares rallied for nine straight days, or are up by 9 per cent.

The brokerage has upgraded its rating on UOB to "buy", with an unchanged fair value estimate of S$28.90.

Said OCBC head of research, Carmen Lee: "Weakness in the banking sector in May or June was largely due to concern of trade war, weakening global and regional economic outlook, and more importantly, the rising likelihood of further cuts in interest rates."

She added that over the past decade, despite a prolonged period of low rates, UOB was able to enjoy a sustainable net profit compounded annual growth rate of 7.7 per cent, with dividend distribution rising 7.2 per cent for the same period. 

With a dividend payout of S$1.20, and based on current share price of S$26.14, yield is 4.6 per cent, Ms Lee noted.

Elsewhere in Asia, the prospect of lower borrowing costs lifted equities with Japan's Topix nudging 0.3 per cent higher, and South Korea’s Kospi rising 0.2 per cent.

Hong Kong’s Hang Seng also added 0.8 per cent, and China's Shanghai Composite Index surged 2.1 per cent. Australia’s S&P/ASX 200 Index gained 0.3 per cent.

These gains come after the Fed left interest rates unchanged at its monetary policy meeting overnight, in line with expectations. The US central bank did however, drop a reference to being "patient" with its policy course, and said it would "act as appropriate" to sustain the economy, citing "uncertainties" in its outlook. Also, nearly half of Fed's 17 policymakers now show a willingness to lower borrowing costs over the next six months compared to none in March.

Over in the commodities market, gold prices hit their highest intraday level in more than five years on Thursday, after the Fed signalled possible interest rate cuts later this year, sending the dollar and US Treasury yields lower.

Spot gold jumped 1.4 per cent to US$1,378.70 per ounce in the early morning trade, while US gold futures surged 2.5 per cent to US$1,382.70 an ounce.

Said Vanguard Markets managing partner, Stephen Innes: "I wish I didn't sound like 'Captain Obvious' on this view, but look no further than the tumbling greenback that is contributing to glittering gold's appeal."

Separately, oil prices also rose over 1 per cent on Thursday as official data showed US crude stocks fell more than expected, and as Opec and other producers agreed on a date for a meeting to discuss output cuts.

Brent crude futures rose 82 US cents, or 1.3 per cent, to US$62.64 while US West Texas Intermediate crude futures gained 79 US cents, or 1.5 per cent to US$54.55 a barrel, data from Reuters showed.