Local shares drifted lower yesterday as worries over a continued deadlock between Greece and its creditors outweighed dovish cues from the United States Federal Reserve.
The benchmark Straits Times Index is again flirting with the key 3,300 support level, after sinking 0.77 per cent or 25.49 points to close at 3,300.42.
Financials led the bourse lower, with DBS Bank down 0.96 per cent or 20 cents to $20.58, while OCBC Bank fell nearly 1 per cent or 10 cents to $10.03. United Overseas Bank was a tad more resilient, ending 0.04 per cent or one cent up at $23 on news that it intends to strengthen its yuan capabilities.
"Banking counters should come under some pressure as much is riding on the expectations of an improvement in net interest margins resulting from higher interest rates," IG market strategist Bernard Aw said.
Magnus Energy Group, the most actively traded stock yesterday, got hit with a query from the Singapore Exchange for "unusual volume movements" after its price skyrocketed 71 per cent or 2.5 cents to six cents, with 96.2 million shares traded.
Noble Group, also actively traded yesterday, sank 4.9 per cent or 3.5 cents to 68 cents as skittish investors bailed out despite the company's fourth buyback on Wednesday. About 40.5 million shares were traded yesterday.
The commodities trader, which said it bought 39.7 million shares at 71.38 cents, has now purchased 102.7 million shares, or 15.2 per cent of a maximum of 673.9 million shares it is authorised to buy.
But the upside has been capped by concerns over the firm's transparency and a decision on Wednesday by Goldman Sachs to class the firm's credit rating as "one notch above junk status".
Another hot stock, Ezion Holdings, jumped 3.4 per cent or 3.5 cents to $1.055, with 36.9 million shares traded. Remisier Vincent Khoo cited a "combination of short-covering and relief that a lawsuit against Ezion was withdrawn".
Meanwhile, real estate investment trusts (Reits) may get some reprieve as the latest signals from the Fed indicate that the pace of increase in interest rates would be more gradual than previously expected.
Fed officials see slightly lower rates at the end of next year and 2017 than initially forecast in March, and more policymakers are now in favour of hiking rates only once, or not at all this year.
"This may relieve the pressure on Reit prices, given that the distribution per unit is estimated to be at 1-3 per cent for every 50 basis points jump in interest rates," Mr Aw said.
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