THE local market kept up its December rally on Friday, moving to a fresh high for the year on news that talks are set to resume on a credible fiscal deal in the United States.
The benchmark Straits Times Index (STI) climbed 7.87 points to close at 3,191.80 - a new 16-month high.
Analysts are hopeful of a further boost next year, with the more bullish among them tipping that shares could go up as much as 24 per cent in 2013.
"The fundamentals are looking up. There's been a synchronised uplift in global economic indicators, and the market is reacting to that," said head of research at Phillip Securities Joshua Tan.
Apart from improved fundamentals, market watchers said the recent gains could be due to year-end window dressing. This involves parties with vested interests propping up share prices by buying index heavyweights such as SingTel and bank stocks to make themselves look good in annual reviews.
Friday's rise brought the index to within touching distance of the 3,200-mark and left it 20.6 per cent up for the year.
Investors were cheered by hopes that a last-minute deal could be struck to avert a fiscal cliff of expiring tax provisions and spending cuts in the US.
The recent bullish sentiment has come on the back of a range of surprisingly positive numbers from the US on the labour market, consumer confidence, some housing indicators and trade. Upbeat Chinese data and hopes of a mild economic recovery in Europe next year have also improved investor appetite.
The STI has finished in positive territory in 14 out of 19 trading days this month. A Singapore Exchange My Gateway report released earlier this month noted that at least 12 of the 30 STI component stocks have reached their highest close of the year this month.