Singapore shares reverse losses, bucking falls in Asia after US Fed delivers another big rate hike

SINGAPORE: Singapore shares reversed earlier losses to end little changed on Thursday (Sep 22), bucking the sea of red in the region and overnight on Wall Street after the US Federal Reserve raised interest rates and signalled further hikes ahead.

The Straits Times Index (STI) finished at 3,263.07, up 0.04 per cent or 1.28 points, after having fallen as much as 0.39 per cent in early morning trade. Losers outnumbered gainers 257 to 230, as 1.02 billion securities worth S$1.09 billion changed hands.

“The tilt towards risk-off has dominated early market performance,” said OCBC’s chief economist and head of treasury research and strategy Selena Ling.

Banking stocks were among the day’s heavily traded stocks in terms of value.

All three counters trimmed their losses towards the end of the trading session with DBS finishing little changed at S$33.52. OCBC shed 0.32 per cent, or S$0.04, to S$12.31, while UOB dropped 0.54 per cent, or S$0.15, to S$27.53.

Real estate investment trusts (REITS), which are sensitive to interest rate fluctuations given the impact on yield spreads and borrowing costs, were mixed.

Mapletree Logistics Trust and Suntec REIT declined about 0.6 per cent each, while Ascendas REIT advanced 0.36 per cent.

Inflight caterer and ground handler SATS tumbled 5.13 per cent, or S$0.21, to S$3.88. The company had on Wednesday said it was in discussions to acquire air cargo handler Worldwide Flight Services, although no definitive terms or formal legal documentation have been agreed upon.

In the region, most stock bourses traded in the red, with MSCI’s broadest index of Asia-Pacific shares outside Japan at its lowest since May 2020.

Japan’s benchmark Nikkei 225 index ended down 0.58 per cent after the Bank of Japan said on Thursday it would maintain its ultra-low interest rate and dovish policy guidance.

South Korea’s Kospi index finished down 0.63 per cent, or 14.9 points, lower at 2,332.31, after falling as much as 1.62 per cent in early trade. The index marked the lowest close since Jul 15.

In Hong Kong, the benchmark Hang Seng Index dived 1.61 per cent, or 296.67 points, to 18,147.95. Earlier in the day, the Hong Kong Monetary Authority raised its base rate charged through the overnight discount window by 75 basis points. Hong Kong’s monetary policy moves in lock-step with the United States as the city’s currency is pegged to the greenback.

Two other central banks in Asia followed through with rate hikes on Thursday – the Bangko Sentral ng Pilipinas announced a well-anticipated hike in its benchmark interest rates by half a percentage point and Bank Indonesia raised its seven-day reverse repurchase rate by 25 basis points.

The Philippine stock market was last seen trading 0.63 per cent lower on Thursday afternoon, while Indonesia’s benchmark Jakarta Composite Index edged up 0.43 per cent.

Meanwhile, the Fed’s announcement also sent the US dollar up to a fresh two-decade high, hitting new records against currencies such as the euro, pound and the yen.

The Singapore dollar lost as much as 0.23 per cent against the greenback to hit 1.4203 – its lowest since April 2020 – earlier in the trading day. It has since clawed back to 1.4174 per US dollar by late afternoon.

A strong dollar is likely to persist as the Fed continues with its aggressive rate hikes, but monetary policy tightening efforts among most Asian central banks should help to limit the extent of depreciation among regional currencies, said Mr Tai Hui, chief market strategist for Asia Pacific at JP Morgan Asset Management.

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