Singapore benchmark index Straits Times climbed 22.6 points or 0.63% yesterday backed by unusual surge in offshore & marine sector named Keppel Corp (4.8%) and Sembcorp Marine (7.5%).
Over the last eight trading sessions, Sembcorp Marine’s share price jumped over 38% - a movement that is very unusual among blue chips. Speculations surrounding a potential deal to privatise or divest Sembcorp Marine by Sembcorp Industry may be the catalyst behind.
It is probably not something new to see consolidations during down cycles. Recently, market focus shift to potential merger between Keppel Corp’s oil & gas segment with SembCorp marine after Keppel announced a US$422 million bribery fine associated with its Brazil business. As crude oil prices more than doubled from the 2016 lows, investors may think that the worst is over and they are more confident about the sector’s outlook.
US equity indices climbed higher last night despite rising concerns about protectionism after President Trump approved broad tariffs on imports of solar cells and washing machines in an attempt to protect domestic manufactures. This decision has received strong opposition from export-oriented countries including China and Korea. Solar cells and washing machine manufacturers may under selling pressure but this is unlikely to change the big picture of the broad market uptrend.
The US dollar Index broke down psychological support level of 90.0 area last night and is trading at around 89.9 area this morning. Japanese yen is one of the key drivers behind. USD/JPY was drifting south after BOJ announced decision to stay put in its meeting yesterday afternoon, which is a very much-anticipated decision. Japanese yen, however, is strengthening despite of Kuroda’s dovish-biased statement which tried to convince the market that the central bank has patience to continue with quantitative easing for ‘as long as it is necessary’ to bring inflation back to 2 percent target.
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