Asian markets cautious ahead of US Fed meeting, STI down 8 points at close

The Hang Sang index outside a bank in Hong Kong.
The Hang Sang index outside a bank in Hong Kong.PHOTO: AFP

SINGAPORE - Asian markets went on a region-wide retreat on Tuesday as sentiment turned cautious ahead of the Federal Reserve meeting, while oil prices showed renewed signs of weakening.

Such volatility will likely be the norm this year, and investors shouldn't be too hasty in expecting a full recovery, market watchers told The Straits Times.

Singapore's benchmark Straits Times Index pared 7.62 points or 0.27 per cent to 2,839.44, snapping a two day gain. Across the whole market, 1.77 billion shares worth S$848.5 million changed hands through the day.

The drop here was part of the regional slide. Tokyo lost 0.68 per cent, disappointed by Bank of Japan's decision to keep its monetary policy unchanged after its March meeting.

Hong Kong shed 0.72 per cent while Kuala Lumpur was down by 0.55 per cent. Shanghai managed to put on 0.17 per cent, saved by a late surge after a weak showing before noon.

Overnight, Dow Jones Industrial Average grew a marginal 0.09 per cent, as investors took their money off the table to wait for more clarity on the Fed meeting outcome.

The same concern is also at play here, remisier Desmond Leong said, adding: "While a rate hike announcement is not expected, people still don't fancy taking their chances so now they're waiting on the side to wait and see.

"But a correction should not be surprising after over two weeks of rebound. It won't be easy for STI to retake the 2,890 level before the January crash. Overall this year is still going to be volatile, and it's unlikely that we will have a full recovery anytime soon."

In the meantime, only nine of the 30 STI constituents rose on Tuesday. Singapore Telecommunications led the way with a two-cents or 0.53 per cent rise, closing at S$3.82.

Singapore Airlines and SIA Engineering both gained. SIA was up six cents or 0.53 per cent to S$11.41, while SIA Engineering closed up two cents or 0.56 per cent at S$3.58.

The top losing blue chip yesterday was OCBC, down six cents or 0.67 per cent to S$8.89, as investors took profit after the counter topped the STI with its gain on Monday.

Keppel Corp dropped 11 cents or 1.82 per cent to S$5.93, and Sembcorp Marine pared 3.5 cents or 2.04 per cent to S$1.68, just as crude oil benchmark Brent futures dropped further to below US$39 (S$53) per barrel.

And just as questions emerged again on the strength of oil prices, oil and gas firms are also not out of the woods yet.

"The recent rally of the oil and gas stocks could be short-lived in the absence of meaningful change in fundamentals. A near term pull-back in oil prices is likely, as talks of output freeze may have hit a roadblock with Iran's resistance to take part and refineries entering their maintenance period in April," DBS analysts said in a note.

whwong@sph.com.sg