Singapore shares gain 0.8% on Thursday on Sino-US trade truce optimism

REPORTS that the US and China have reached a tentative truce ahead of this weekend's meeting at the G-20 summit saw the local and regional equities market stage a rebound.

The renewed optimism saw the Straits Times Index (STI) reverse losses of recent sessions, finishing 3,328.60 on Thursday, gaining 27.35 points or 0.8 per cent in the process.

Key regional markets Australia, China, Hong Kong, Japan and South Korea all closed comfortably higher. Malaysia bucked the trend, finishing with a modest loss.

Investors had much positively-tinged news over trade to digest between the end of Asian trading on Wednesday and the start of Thursday's session.

First, it was US Treasury Secretary Steven Mnuchin suggesting that a trade deal was 90 per cent through. Then came US President Donald Trump's admission that reaching a trade deal was a possibility on Saturday though he added the US was prepared to impose tariffs on most of the remaining Chinese imports if the two were not able to see eye-to-eye.

News that the US and China have agreed to a tentative truce, with press releases to be out ahead of this Saturday's meeting in Osaka, strengthened the case for positive sentiment.

That said, markets tend to cling onto positive news and investors are best placed not to be over-optimistic.

On Mr Mnuchin's comments, Vanguard Markets managing partner Stephen Innes noted that the remaining 10 per cent "has always been the gap too far to bridge, especially that trust gap where the US wants to keep existing tariffs in place to ensure China's compliance".

Meanwhile, FXTM research analyst Lukman Otunuga said: "Given the unpredictability of President Trump, it would be unwise to be unprepared for a possible scenario where talks descend into disagreements on trade. Such an outcome will most likely rattle financial markets as concerns over slowing global growth and sizzling trade tensions fuel risk aversion."

The Singapore market had another session of above-average activity. Trading volume clocked in at 1.39 billion securities, 15 per cent over the daily average in the first five months of 2019. Total turnover came to S$1.24 billion, 19 per cent over the January-to-May daily average.

Across the market, advancers trumped decliners 239 to 151. The STI had seven of its 30 components ending in the red.

Financials were among the main gainers. DBS Group Holdings added S$0.35 or 1.4 per cent to S$25.83, OCBC Bank was S$0.17 or 1.5 per cent higher at S$11.42 while United Overseas Bank finished at S$26.13, up S$0.46 or 1.8 per cent.

The risk-friendly mood of the day and news that Nasdaq-listed chipmaker Micron Technology posted stronger-than-expected earnings' guidance for the third quarter saw a number of tech stocks outperform the benchmark index.

Venture Corporation shares climbed S$0.29 or 1.8 per cent to S$16.31, Hi-P International gained S$0.07 or 5.2 per cent to S$1.41 and AEM Holdings finished S$0.04 or 4 per cent up at S$1.04.

The cyclically-sensitive manufacturing and semiconductor sectors have been facing headwinds from sector slowdowns and the ongoing US-China trade conflict.