Asia markets mixed; oil stocks in focus

After tumultuous trading on Tuesday with major indices tanking, most investors seemed content to remain on the sidelines while waiting for the conclusion of the US Federal Reserve's rate decision.

Asian markets regained their footing from the previous session, but traded mixed yesterday. Singapore stocks finished higher yesterday, with the Straits Times Index gaining 0.4 per cent or 13.11 points to 3,058.65.

Across Asia, the Shanghai bourse ended the day lower at 1.05 per cent while Hong Kong traded 0.20 per cent higher. In Japan, the benchmark index lost 0.60 per cent on the day. Australia also finished the day lower, the index weighed by energy stocks.

This was despite positive signs coming from US Treasury Secretary Steven Mnuchin who said that the US and China are planning to meet in January to negotiate a broader truce in their trade wars, although they are unlikely to have any face-to-face contact before then.

Mr Dave Lafferty, chief market strategist at Natixis Investment Managers said: "We suspect the market is getting a bit of geopolitical risk fatigue. While investors have been thrown about by tweets, tariffs, populism, and government shutdowns, we believe these events are starting to lose their shock value."

He added: "As we move into 2019, we believe the volatility spikes of February and October of this year have set a higher bar: a bar which largely reflects the right amount of market uncertainty moving forward."

Trading was also mixed on the local bourse, with 177 gainers to 166 losers, as some 988.7 million shares worth $852 million changed hands.

Heavily traded counters included Singtel, which closed flat at $2.96 on a trade of over 21 million shares, and Golden Agri-Resources, which fell 1.96 per cent to $0.25 with 34.4 million shares traded.

Among financials, only OCBC Bank ended the day in red, down 0.09 per cent to $11.14. Its peers edged higher - UOB added 0.25 per cent to $24.36, while DBS gained 0.09 per cent to $23.57.

Of note, most Singapore-listed oil and gas, as well as offshore and marine stocks traded sideways, as crude prices suffered another steep fall, under pressure from burgeoning US supplies. On Tuesday, the American Petroleum Institute's reports of another build-up in crude stocks and petrol inventories sent WTI futures crashing below the US$50 per barrel support level, and to their lowest in a year.

Golden Energy closed unchanged at $0.23, as did Vallianz at $0.01 and Sembcorp Marine at $1.58. Sembcorp Industries declined 0.39 per cent to $2.57.

Earlier this month, DBS Research had expected oil and gas stocks to regain ground after the Opec and other oil producers, including Russia, agreed to a larger-than-expected output cut. DBS said the deal would lift the sentiment on oil and gas players, particularly upstream proxies and shipyards.

But the cuts will not happen until next month. And now, market observers are expecting oil prices to head further down towards the US$46 per barrel support, as production hits highs in the US, Russia and Saudi Arabia.

For full listings of SGX prices, go to http://btd.sg/BTmkts