Stocks lose steam in the afternoon

SINGAPORE shares closed on a positive note on a mixed day for the region but the local market is still hamstrung by the murky economic outlook and wobbly oil prices.

The benchmark Straits Times Index (STI) had a strong morning session, rising to 2,845 before noon, but the afternoon trading was less certain, leaving the index up just 16.86 points or 0.6 per cent at 2,835.35.

The market has gone through a stretch of ups and downs between 2,820 and 2,880 since mid-March, when the STI recovered to the levels before the January crash. Markets watchers expect more consolidation to set in in the near term.

"We maintain our view that STI's rally has stalled at 2,910 and the short-term trend has turned sideways in the weeks ahead," DBS analyst Yeo Kee Yan said, calling the next support level at 2,785 and a resistance at 2,920.

The uneven session yesterday followed the 0.61 per cent rise for the Dow Jones Industrial Average last Friday, as Wall Street turned confident on the United States corporate earnings outlook after the better-than-expected jobs and manufacturing data.

In Asia, the signs of recovery were less uniform. While China's manufacturing purchasing managers' index showed a surprise expansion last month, an equivalent survey in Japan showed a softer sentiment.

Bank of Singapore chief economist Richard Jerram believes China's issues still persist at a fundamental level.

"Credit (in China) is still expanding at an excessive pace which implies that the current growth model is not sustainable," he said in a note yesterday.

"(Growth) needs to be derived from domestic productivity gains, rather than endless credit expansion."

Against this backdrop, Tokyo dropped 0.25 per cent and Sydney pared 0.08 per cent. Markets in Hong Kong and China were closed for a holiday.

In Singapore, 20 of the 30 STI constituents rose yesterday, with SingTel leading the gainers with a five-cent or 1.33 per cent increase to $3.8.

Some property blue chips were also strong. Global Logistic Properties added five cents or 2.58 per cent to $1.985 and City Developments closed up 24 cents or 2.94 per cent at $8.39. Ascendas Real Estate Investment Trust rose three cents or 1.26 per cent to $2.41.

Singapore Press Holdings gained one cent or 0.25 per cent to $4.04 while OCBC and United Overseas both went up.

OCBC rose two cents or 0.23 per cent to $8.84 while UOB put on seven cents or 0.37 per cent to $18.83.

DBS, however, was among the biggest losers yesterday, dropping four cents or 0.26 per cent to $15.17.

The banking sector remains under scrutiny following a move by Moody's last week to cut the rating outlook for the three local banks to negative, amid persistent concerns over business headwinds and deteriorating credit quality.

Meanwhile, Keppel Corp trudged through another bad day, closing down eight cents or 1.38 per cent at $5.70.

Sembcorp Marine dropped two cents or 1.23 per cent to $1.605. This came as crude oil benchmark Brent stayed below $39 after recent talks by main producers to curb production failed to gain traction.

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