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THE stock market paused to take a breather yesterday, following three days of spectacular gains that saw share prices return to levels not seen for 11 months.
After breaking through the 2,700-level soon after the opening bell, profit-taking in blue chips then dragged the benchmark Straits Times Index (STI) down 32.88 points to 2648.76.
What put the dampeners on sentiment was market perception that hot money was being diverted from regional bourses into Hong Kong, where lending giant HSBC Holdings had reported better-than-expected half-year results.
Also reducing investors' appetite for risk was a report that hard disk drive maker Seagate was retrenching about 2,000 workers from its Ang Mo Kio plant as part of its relocation of some operations to other countries.
Its layoffs cast an unwelcome spotlight on the problems confronting the real economy.
This provided traders with a much-needed reality check and saw them taking money off the table.
'The run-up has been exhilarating over the past three weeks. And with the STI retracing back to last August levels, some profit-taking is inevitable,' said a trader.
AmFrasers Securities' Najeeb Jarhom said he expected the market to consolidate as the earnings season wound down over the next few weeks.
Any pull-back in stock prices should offer traders a buying opportunity, he added.
Among the biggest losers yesterday were those that had emerged as clear winners during the three-week rally.
These included the three local lenders. DBS Group Holdings lost 24 cents to finish at $13.70, OCBC Bank was 10 cents behind at $7.70, while United Overseas Bank fell back 36 cents to $17.30.
Whether the rally has any more mileage left in it will depend on the half-year results produced by UOB today and on DBS' interim report out on Friday.
Property developers came under some selling pressure yesterday, with City Developments down six cents to $10.24 and CapitaLand shedding eight cents to $3.75.
But shoring up the STI for the second day running were gains made by stocks linked to the Hong Kong Jardines group, with Jardine Matheson gaining 60 US cents to US$30.60 and Jardine Strategic rising 30 US cents to US$17.
Meanwhile, on the eve of announcing its full-year results, the Singapore Exchange was down 14 cents at $8.62.
Looking at the broader market, trading stayed brisk, with 2.63 billion shares worth $2.17 billion changing hands.
Understandably, the Seagate retrenchment cast a pall over the technology sector. Losers included Beyonics, which lost 0.5 cent to 20 cents, and Chartered Semiconductor, which fell six cents to $2.30.
Bucking the trend, Creative Technology took its total gains over the past two days to 55 per per cent by rising $1.07 to $6.97.
Looking ahead, one dealer said that the stock market would feel the impact of the United States jobless data report, which is expected to be released on Friday.
Any nasty surprise might cause the rest of trading for this month to be volatile, after the sharp rebound experienced last month.
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