SINGAPORE (Thomson Financial) - Singapore shares closed lower on Tuesday as investors remained cautious about inflationary pressures arising from high oil prices.
Light sweet crude hit a new trading high of $139.89 a barrel on Monday before settling down at $134.61on the New York Mercantile Exchange.
'Oil prices remain a big cloud on the global economic picture and the inflation pressure it is causing around the world, squeezing both household budgets and business profits,' said David Cohen, chief economist at Action Economics.
The benchmark Straits Times Index slipped 8.68 points or 0.3 percent to close at 3,028.24.
Decliners led gainers 279 to 225, with 997 stocks unchanged.
There were 1.27 billion shares traded, valued at S$1.28 billion.
'The central banks' shift towards a tightening stance in order to head off the acceleration in inflation -- that is not helpful for growth in economies around the world,' said Cohen.
The surprising 10.5-percent decline in May non-oil domestic exports may have also weighed on sentiment.
'Given the uncertainty about the global outlook, this is one more reason for nervousness,' said Cohen.
Shares of property developers fell as investors continued to worry that the housing market would remain weak even though sales picked up in May. CapitaLand slid 3.1 percent to S$5.72, City Developments dropped 2.1 percent to S$10.30 and Keppel Land eased 0.4 percent to S$5.14.
Banking shares were mixed, with DBS Group down 0.1 percent at S$19.42 while United Overseas Bank up 0.2 percent at S$19.24 and Oversea-Chinese Banking Corp up 0.1 percent at S$8.35.
Singapore Exchange fell 1.7 percent to S$7.34 after DMG & Partners cut its target price for the bourse operator to S$6.20 from S$6.60 and kept its 'sell' rating on concern over falling trading volumes.
The bourse's average daily turnover fell from the peak of S$3 billion in October last year to S$1.8 billion in May and S$1.54 billion in the first two weeks of June, DMG said.
Among other blue chips, Singapore Telecom edged up 0.3 percent to S$3.73.
Singapore Airlines added 0.7 percent to S$15.06 after its operating data in May came in better than expected. SIA said its overall load factor stood at 66.2 percent last month from 66.5 percent a year ago as passenger and cargo capacity rose in tandem with traffic growth.
'May data beat expectations as demand surprisingly caught up with SIA's capacity injection. This reduces our concerns about the risk of excess capacity limiting SIA's ability to pass on higher fuel costs as effectively as last year,' JP Morgan analyst Corrine Png said in a note to clients.
JP Morgan has a 'neutral' call on SIA with a target price of S$15.00.
($1 = S$1.36)
pearl.bantillo@thomsonreuters.com . jb/nt COPYRIGHT Copyright Thomson Financial News Limited 2008. All rights reserved. The copying, republication or redistribution of Thomson Financial News Content, including by framing or similar means, is expressly prohibited without the prior written consent of Thomson Financial News.
© 2008 AFX News
