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Investors wary ahead of G-20 summit

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Straits Times Index finishes at 3,301.25 or 0.1% lower; telecom and consumer staples in favour

The local equities market closed lower yesterday after a Wall Street sell-off as investor optimism cooled.

Singapore's Straits Times Index (STI) continued to recede, finishing the session at 3,301.25, 3.02 points or 0.1 per cent lower.

Regional markets sang the same tune for the most part with Australia, China, Japan and Malaysia ending lower. South Korea closed flat while Hong Kong recorded a modest gain.

Markets rebounded towards the end of last week when the US Federal Reserve revealed its dovish stance and US-China trade talks appear to be back on track with this weekend's meeting at the G-20 summit.

Investors are remaining cautious ahead of the meeting in Osaka and the extent of the Fed's possible rate cuts next month.

Fed chair Jerome Powell also warned on Tuesday that downside risks to the US economy have grown, adding to the somewhat downbeat sentiment.

Vanguard Markets managing partner Stephen Innes believes that risk sentiment in regional markets has yet to be "snuffed out".

That being said, he added that "unlike the stampede into risk assets last week, not only has the dust settled, there are signs that the market is taking on some risk insurance".

Bearing in mind that markets have been volatile since last month, the possibility of risk-on sentiment returning to the fore is not low.

"With news emerging around market close that US Treasury Secretary Steven Mnuchin believes a US-China trade deal is 90 per cent complete, the bulls might have their way (today)," a remisier remarked.

Activity in the Singapore market was above average.

Trading volume clocked in at 1.27 billion securities, 6 per cent over the daily average in the first five months of this year.

Total turnover came to $1.17 billion, 12 per cent over the January-to-May daily average.

Across the market, decliners outpaced advancers 212 to 171. The STI had half of its 30 components ending in the red.

With last week's equities rebound settling down, investors have moved back to adding defensive positions in telecom and consumer staples, market watchers observed.

IG market strategist Pan Jingyi said: "Even if we see some signs of improvement in US-China trade relations with this weekend's Trump-Xi meeting, the expectation that global growth will continue to taper boosts the attractiveness of defensives going into the second half of the year."

On 59.2 million shares traded, Singtel was the benchmark index's most traded stock for a second successive session, adding two cents or 0.6 per cent at $3.50.

Investors were buoyed by Singapore's largest telco revealing in its annual report an intention to monetise some of its loss-making digital investments and its chief executive taking a big pay cut.

Traders acknowledged that a number of real estate investment trusts (Reits) have hit dear valuations following the rally on expectations of a dovish Fed.

That said, Reits continue to gain the attention of investors.

Google Asia-Pacific's decision to lease space at Alexandra Technopark from the first quarter of next year saw Frasers Commercial Trust units jump eight cents or 5.1 per cent to close at $1.66, the highest closing since mid-September 2008.

Among tech stocks, Venture Corp shares continued to slide with analysts lowering their price targets due to headwinds that the global manufacturing sector is facing and over the US-China trade conflict.

After closing 4.9 per cent lower on Tuesday, Venture shares extended losses to close 44 cents or 2.7 per cent down to $16.02.

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