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STI gains 1.8% in session after its biggest rout since October 2008

Singapore's Straits Times Index (STI) rebounded on Tuesday, after fears of a global Covid-19 epidemic and a shock fall in oil prices sent the index to its largest single-day fall since October 2008.

The benchmark index fell 0.8 per cent at the open, but reversed its course within the first hour of trading en route to closing 50.17 points or 1.8 per cent higher at 2,832.54. Five of the STI's 30 components ended the day in the red.

Improved sentiment after what is now being termed as "Black Monday" was due to a number of factors.

For one, equities picked up after both US President Donald Trump and Vice-President Mike Pence outlined potential fiscal stimulus measures -  including payroll tax package - to stem the economic malaise brought about by Covid-19. 

Meanwhile, Chinese President Xi Jinping's visited Wuhan for the first time since the coronavirus outbreak and Hubei province's plans to permit people to travel within its boundaries were being viewed as a positive.

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Oil prices also recovered from multi-year lows as the Tuesday session in Asia rolled on.

Keppel Corp and Sembcorp Industries, the STI counters most affected by a plunge in oil prices on Monday, clawed back some of those losses. Keppel added S$0.08 or 1.4 per cent to S$5.70; Sembcorp climbed S$0.05 or 3.1 per cent to S$1.66.

The local lenders also bounced back from their 52-week lows. DBS gained S$0.34 or 1.6 per cent to S$21.49, OCBC Bank added S$0.20 or 2.1 per cent to S$9.72, while United Overseas Bank was finished at S$21.94, advancing S$0.44 or 2 per cent.

Joel Ng, KGI Securities head of research, said in a note to the brokerage's clients that valuations for the trio are now at "reasonable levels". That being said, he added that "this isn’t anything to get excited about", unless investors have an investment horizon of at least one year due to headwinds the lenders face this year. 

Singapore Press Holdings (SPH), which publishes The Business Times, was the STI's biggest gainer in percentage terms. After closing at its lowest in more than 20 years on Monday, the media and property group jumped S$0.13 or 7.5 per cent to S$1.87.

UOB Kay Hian upgraded its call on SPH to "buy" on valuation grounds and said its defensive aged care and student accommodation business could "could prove to be valuable amid the wider market selldown".

Trading volume in the city-state stood at 1.86 billion securities. Total turnover was S$2.46 billion. Advancers trumped decliners 324 to 181.

Elsewhere in the Asia-Pacific, benchmarks in Australia, China, Hong Kong, Japan, Malaysia, South Korea and Taiwan all posted sizeable gains.

Markets might be recovering from Monday's shock, but volatility is likely to persist, said Bank of Singapore head of investment strategy Eli Lee.

In a note to clients, he wrote: "As of now, conditions are not ripe for stability in financial markets. The rate of infection for the virus outbreak outside of China has not shown any signs of peaking, and deep value has not sufficiently emerged for bargain buyers to come in."

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