SG Market (06 Jun 14)

US Market: US shares charged to new records after the ECB launched aggressive stimulus package to spur growth in eurozone and avert deflation ahead of the all-important US nonfarm payrolls report. The DJIA rose 99 pts to 16,836 (+0.6%), while the S&P 500 added 13 pts to 1,940 (+0.7%) and the Nasdaq leapt 45 pts to 4,296 (+0.1.1%). Industrial and financial shares saw sharp gains with small caps also jumping 2%. Investors reacted positively to the unprecedented move by ECB to cut its key lending rate to 0.15% from 0.25% and deposit rate to a historic -0.1% from zero, effectively charging banks that park excess reserves at the central bank. The cuts were accompanied by a new €400b liquidity line tied to bank lending and assurances that asset purchases were also on the cards. The ECB’s push was widely expected as ECB officials had in recent weeks hinted strongly of further monetary stimulus and means that global liquiditywill remain high even as the US scales back its quantitative easing. Meanwhile, US jobless claims increased by 8,000 last week to 312,000, which was above market estimates, but the four-week average fell to its lowest level since Jun 2007. Banks outperformed, led by JPMorgan (+1.7%), Citigroup (+1.6%) and Wells Fargo (+1.2%). Among other stocks in focus, Amazon surged 5.5% on speculation that the tech giant is about to launch a new smartphone during its upcoming event on 18 Jun. Ciena jumped 18.4% after its 2Q earnings beat estimates, while game developer Zynga tumbled 9.2% after giving a less upbeat outlook on its propsects. In deal news, Sprint dropped 4% as the telecom giant closed in on a US$32b deal to acquire rival T-Mobile (-2.3%). S’pore shares are poised to get a lift from ECB stimulus and Wall Street rally but upside will be capped by a cautious mood and lack of clear conviction with interest centred on a few potential M&A candidates such as STATS ChipPAC, Tigerair, Noble and selected small cap names. The STI bounced off the 20-day moving averge at 3,272 yesterday but the overall technical picture remains weak. Below this, the next support lies at 3,255 while topside resistance is tipped at 3,320. Stocks to watch: *China New Town: Auctioned land use right for land parcel in Shanghai Luodian new town project to Powerlong Real Estate Holdings at the reserve price of Rmb124.5m or Rmb8,860 psm. The 14,046 sqm plot is slated for commercial use and has a plot ratio of 2x. *ES Group: Won repeat orders for jack-up blocks (part of a jack-up rig’s hull) worth $17m from a major shipyard in S’pore, to be delivered in 2015. *Centurion: 49%-owned Malaysian associate, Oriental Amber, acquired a 7.6-acre freehold land in Johor Baru for RM11.7m ($4.5m). The land is currently zoned for agricultural use, subject to conversion to industrial use with plans to develop two workers’ dormitory of 5,000 beds each. *Innopac: Widens loss for FY13 after making additional provision of $34m for its FY13 results in relation to the unfulfilled sale of certain marketable securities to an unnamed counterparty. *Asiatravel: Pemberton Asian Opportunities Fund purchased 250.000 shares @ $0.30 from the open market on 30 May, raising its stake from 4.95% to 5.04%.