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Asia300

Wall Street rally lifts Singapore and Malaysia stocks

SINGAPORE (NewsRise) -- Shares in Singapore and Malaysia soared to multi-month highs Thursday, as Wall Street posted its best session this year after Donald Trump struck an optimistic tone in his address to Congress.

U.S. benchmark indexes jumped over 1% each overnight after Trump affirmed his plans to cut taxes, even as he avoided going into detail. The Dow Jones Industrial Average, which breached the 21000 level for the first time ever, has risen over 15% since Trump's election win.

"The U.S. president's re-iteration of a commitment to a massive infrastructure spend and tax reform inspired gains, but some commentators cited the controlled tone of the speech as a key driver," said Michael McCarthy, chief market strategist at CMC Markets. "The U.S. rally is all the more remarkable as interest rate markets responded to Fed speak of a potential lift at the March meeting."

Hawkish comments from a chorus of Federal Reserve officials firmed expectations of a rate increase this month, lifting U.S. bond yields on Wednesday. Futures traders are now factoring in a 66% probability of a rate hike in March, according to CME Group's FedWatch tool.

The FTSE Bursa Malaysia KLCI jumped 1.1% to 1,715.67, its best session in almost two months and its highest since April 2016. The nation's central bank left its overnight policy rate unchanged at 3%, as was widely expected. Bank Negara Malaysia expects growth momentum to sustain and sees improved domestic demand and positive contribution from the external sector to help the economy's performance.

The central bank said headline inflation is projected to be higher in 2017, reflecting primarily the pass-through impact of the increase in global oil prices on domestic retail fuel prices.

"U.S. equities ended on a stronger note after Trump's speech as investors focused on the positive tone of his message instead of the details in the economic plans," said Loui Low Ley Yee, an analyst with Hong Leong Investment Bank. "Without any negative surprises in Trump's speech, we expect short term buying interest to prevail,"

Lenders led gains in Malaysia, with AMMB Holdings jumping over 6%. RHB Bank and CIMB Group Holdings rose at least 2%, while the nation's largest lender Malayan Banking added 1.5%.

"Sector valuation has marginally picked up in 2017. We believe this has priced in slightly better prospects for the sector, but return on equity traction has yet to catch up to it," Lynette Chang, an analyst at AllianceDBS Rsearch, said in a note.

SapuraKencana Petroleum rose 3.2% to 1.95 ringgit. The oil-and-gas services firm on Thursday said it secured four contracts worth a total $97.4 million from Petroliam Nasional and one of its associate companies.

Neighboring city-state Singapore's FTSE Straits Times index rose 0.4% to 3,136.48, its highest since August 2015. Heavyweight DBS Group Holdings rose 1.1% to S$19.03 after its Chief Executive told Reuters earlier today that the lender had taken most of the pain from the oil and gas sector in 2016.

The rise in U.S. bond yields weighed on real estate investment trusts. Ascendas Real Estate Investment Trust slipped 0.8% to S$2.47 and Capitaland Mall Trust declined 0.5% to S$1.955.

Keppel Corp. advanced 1.8% to S$7.22. The rig builder bought back shares worth S$19.4 million in February, according to the latest data from SGX.

Yangzijiang Shipbuilding Holdings rose 4.1% to S$1.02, extending yesterday's 6% rally after a jump in fourth-quarter net profit. Nomura raised the stock's target price by over 20% to S$1.04.

--Kevin Lim and Nimesh Vora

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