STI joins Asia rally, nears 3,000-level again

THE Straits Times Index (STI) recorded tremendous gains of 86.22 points or 2.97 per cent to 2,993.19 on Friday, taking it close to the psychological support of 3,000 once again.

It joins other indices - except China's - in tracking Wall Street optimism after Joe Biden was confirmed as the next US president.

This also brings expectations of more stimulus spending to help the US economy overcome its pandemic-induced downturn.

In response, Japan's Nikkei 225 gained 2.36 per cent, Malaysia's KLCI added 1.89 per cent, and the Hang Seng Index gained 1.2 per cent. Only the Shanghai Composite Index retreated 0.17 per cent.

Another reason for the STI's outperformance could be related to its heavy composition of financial stocks. IG senior market strategist Pan Jingyi said: "Notably with the yield curve steepening, tracking the US treasury yield curve, this has been a boost for bank stocks and likewise for the STI that is financials heavy."

The STI has risen 5.3 per cent this week. On Friday, some 2.55 billion securities worth S$2.13 billion changed hands, with advancers outnumbering decliners 321 to 202.

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Top index performer DBS added S$1.37 or 5.26 per cent to S$27.42 - near its last peak of S$27.50 in March 2018 - amid a banking stock rally.

City Developments was the worst performer and the only decliner, extending its week-long losses as it fell S$0.20 or 2.65 per cent to S$7.35 over recent director departures.

This was despite executive chairman Kwek Leng Beng's attempt to defend recent appointments to the board as an addition of diverse skills and perspectives.

Axi chief global market strategist Stephen Innes observed that fiscal and monetary stimulus as well as high savings rates have created the perfect conditions for speculation and asset price lift-off.

"And when adding the benefit that investors will no longer be held hostage to the previous White House collective confusion on domestic and external policy, it is no wonder why the Street is still popping the New Year champaign corks, basking in the afterglow of the rally party which is looking to extend as we progress into 2021."