Overbought Singapore Market Nonetheless Called Higher On Friday

The Singapore Straits Times Index (STI) extended its nine-session winning streak, gaining 0.71% on Thursday to close at 4,161.43, contributing to a 3.6% increase over the period. This sustained upward trend is largely driven by robust global market sentiment, particularly from Wall Street, where the NASDAQ and S&P 500 reached record highs, propelled by upbeat U.S. economic data including stronger-than-expected retail sales and declining unemployment claims. The positive global forecast, including rising oil prices, suggests continued momentum for Asian markets.

Analysis

The Singapore stock market is exhibiting strong upward momentum, with the Straits Times Index (STI) concluding its ninth consecutive session of gains, accumulating over 3.6% to close above the 4,160-point level. The latest 0.71% advance was driven by notable strength in the retail and telecom sectors, highlighted by a 4.00% surge in DFI Retail Group and a 2.96% jump in SingTel. While major financials like DBS Group and OCBC posted gains, the broader performance across financials, properties, and industrials was mixed, indicating selective buying rather than a uniform rally. This positive sentiment in Singapore is significantly buoyed by an upbeat global forecast, primarily stemming from Wall Street, where the NASDAQ and S&P 500 reached new record highs. The U.S. rally was underpinned by robust economic data, including a stronger-than-expected rebound in June retail sales and an unexpected dip in jobless claims to a three-month low, suggesting resilient consumer demand. Concurrently, rising crude oil prices, with WTI settling at $67.54 a barrel on geopolitical tensions and inventory draws, provide a tailwind for energy stocks.

Key Decisions for Investors

• Given the STI's sustained nine-day rally, supported by strong U.S. economic data and positive global sentiment, investors could consider maintaining exposure to Singaporean equities to capitalize on the current bullish momentum.
• Traders should note the sector-specific leadership from retail and telecoms, evidenced by significant gains in DFI Retail and SingTel, and consider screening for opportunities in these areas as well as in financials and energy, which are forecast to benefit from global tailwinds.
• The static performance of multiple major REITs amidst the broad market rally suggests investor caution in the rate-sensitive property trust sector, warranting a closer look at individual fundamentals before committing new capital.
• Investors should closely monitor upcoming U.S. economic data and geopolitical developments impacting oil prices, as the market's positive trajectory is heavily reliant on these external factors and any negative shift could trigger a reversal.