Singapore stocks at 2-year high as US data spurs global equity rally; Malaysia shares flat
SINGAPORE (Nikkei Markets) - Singapore shares rose Monday to fresh two-year highs as weaker-than-expected inflation and retail sales data from the U.S. cast doubts over the Federal Reserve's next rate increase, boosting demand for regional assets. Malaysia stocks ended little changed.
U.S. consumer prices rose at a slower-than-expected pace last month, increasing by 1.6% on-year in June, down from 1.9% in May. Fed chair Janet Yellen had remarked last week that slowing inflation could prompt a change in the central bank's policy stance. Her comments caused a rally in equity markets, and Friday's data provided more evidence that weak inflation may spur the authority to hold back on more rate hikes. Separately, a report showed that retail sales in the economy fell for a second consecutive month.
"The fed funds future are now pricing in 11.5 basis points of tightening this year and only 39 basis points of tightening through to the end of 2018," said Chris Weston, chief market strategist at Melbourne-based brokerage IG. "So a 46% chance of one hike this year (presumably December) and less than two hikes priced through to 2018. This backdrop is great for emerging markets."
The Nikkei Asia300 Index of companies outside Japan extended last week's rally, adding 0.2% on Monday following the gains in the U.S. market. The S&P500 and Dow Jones Industrial Average closed at record highs on Friday.
Asian indices also got a boost from a better-than-expected China economic data. China's gross domestic product grew 6.9% in the April to June quarter, beating expectations. Separately, retail sales in Asia's largest economy rose 11% last month and industrial output increased 7.6%, also exceeding forecasts.
Singapore's FTSE Straits Times Index rose 0.3% to 3,298.24. The country's non-oil domestic exports rose 8.2% in June to S$14.7 billion ($10.7 billion) compared with a year ago. On a month-on-month seasonally adjusted basis, non-oil domestic exports fell 2.7% in June.
Ascendas Real Estate Investment Trust rose 1.2%, helped by the decline in U.S. bond yields following the weak inflation data. CapitaLand Commercial Trust and Capitaland Mall Trust added 0.3% each.
DBS Group Holdings rose 1.6%, the biggest contributor by points to the advance on the index.
Singapore Press Holdings slipped 2.6% to S$3.03 after its third-quarter net profit fell 45%. The company said that the operating environment is expected to remain challenging in view of the continuing disruptions in the media industry.
Sunpower Group rose 3.7% after the company said it was awarded a contract by Hengli Petrochemical (Dalian) Refining and Chemical and Sinopec Engineering Incorporation. The order worth 116.3 million yuan ($17.1 million) that is expected to have a positive impact on its net profit through 2019, it said.
The FTSE Bursa Malaysia KLCI ended little changed at 1,755.19. DiGi.Com added 1.5%, recovering from a near 7% slump last week following disappointing earnings. Axiata Group rose 0.9% and Maxis closed higher by 0.6%.
Prestariang jumped 8% at 2.38 ringgit after BIMB Securities initiates the stock's coverage with a "buy" call and a target price of 2.85 ringgit. "We are positive on Prestariang's earnings prospect given the potentially significant contribution from the SKIN (National Immigration Control System) project and better demand outlook for its software distribution division," BIMB said in a note.
AHB, in the business of office interior products, rose 6.3% amid speculation a new shareholder will buy a substantial stake in the company, leading to an injection of government-related contracts.
MCT, an engineering services company, added 0.5% after The Edge newspaper, citing unnamed sources, reported that its largest shareholder Ayala Land plans to buy an additional stake, triggering a mandatory general offer.
--Nimesh Vora and Kevin Lim