Wall Street Rally

Wall Street rally fuels STI recovery

ASIA'S stock markets danced to Wall Street's tune yet again yesterday.

An overnight rally in New York was enough to give most Asian bourses a spur - including Singapore's, which enjoyed a mild rally that ended four straight sessions of losses.

The Straits Times Index (STI) surged 38.94 points, or 1.4 per cent, to 2,925.50, but is still down 15.6 per cent for the year.

Volume was higher than the last two days but remained thin: just 980 million shares valued at $1.2 billion changing hands. Trading volume last week averaged a mere 1.03 billion shares worth $1.29 billion a day.

Earlier, the Dow Jones Industrial Average's 266-point or 2.4 per cent charge provided enough fuel for a quick recovery here, after the previous day's 0.8 per cent retreat.

Rising key regional bourses also aided Singapore's rally. Japan's Nikkei 225 gained 1.6 per cent, while Hong Kong's Hang Seng Index surged 2 per cent. Australian stocks added 1.8 per cent and South Korean shares rose 0.7 per cent. ack home, the local banks and Wilmar International led the rally.

DBS Group Holdings surged 28 cents to $19.32, United Overseas Bank added 12 cents to $19.36, while OCBC Bank gained 11 cents to $8.40. JP Morgan kept its overweight call on the sector, saying that its second-quarter earnings numbers should calm investor worries. It named DBS as its top pick with a $25 price target.

'Given the renewed concerns about global financials, a no-surprise outcome would be perceived positively,' it said.

Palm oil plays had a mixed outing. Wilmar jumped 18 cents to $4.22 - the single biggest boost to the index - while Indofood Agri gained five cents to $1.73. But Golden Agri Resources slid half a cent to 71 cents and First Resources lost two cents to 95 cents. Credit Suisse kept its overweight call on the sector and noted that palm oil futures had hit its lowest level since December last year.
However, it predicts that palm oil prices will recover in the fourth quarter: 'We believe that the global stock-to-use ratio for vegetable oils, including palm oil, will remain low in 2009. Therefore, palm oil prices should remain relatively high in 2009.'

Blue chips had bright outings, with SingTel adding four cents to $3.57, Singapore Exchange gaining seven cents to $6.90 and Singapore Airlines rising 44 cents to $15.82.

All but six of the STI's 30 component stocks posted gains, with just two decliners and four unchanged. Meanwhile, on the overseas front, United States regulators have extended an emergency rule to restrict the short-selling of the stocks of mortgage finance giants Fannie Mae and Freddie Mac and 17 large investment banks.