Can STI sustain its record finish?

Benchmark index broke the 3,000 barrier yet again but lingering market uncertainty could pull it back down.

The Straits Times Index climbed 1.3% to end at 3,026.40, its highest close yet for the year, according to IG Markets in evening update, "as traders swarmed back into the market on a fresh wave of upbeat economic news."

"A strong start was always on the cards after Wall Street’s impressive night which saw its three main indices all post healthy gains. Comments by the Fed that the US economic recovery was taking shape and better-than-expected sales data have revitalised global markets, which had grown euro-weary after Greece’s drawn-out debt swap," it said.

Its also the third time for the STI to breach the psychological 3,000 level, although there's still doubt on whether it can sustain the bull run in the face of persistent negative news.

"With so much uncertainty remaining in the global economy, mainly in the form of European debt woes and China’s slowdown, the STI still faces much resistance at these heady heights," said IG Markets.

"This hasn’t stopped UBS upgrading its year-end target for the index from 3200 to 3350 driven by better earnings forecasts to come. But few can argue with the 14% rise the STI has achieved so far this year," it said.

"Among Singapore’s shining lights was the Singapore Exchange which lifted more than 3% after announcing moves to open trading hubs in Chicago and London to attract foreign investors. Ever since SGX’s failed bid for Australia’s ASX almost a year ago, it has been on a desperate hunt for trophies for its cabinet. It still has plans to add the London Metal Exchange to its portfolio although it faces some stiff competition," it added.

"As traders reflect on the rhetoric coming from last night’s Fed meeting, talk of ‘moderate’ economic growth has now replaced ‘modest’. But it still acknowledged that there are ‘strains in the global financial markets’ and is likely to keep rates low until late 2014," it said further.