BullsAndBears

Asian markets claw back some losses

Investors increasingly believe US will delay interest rate hikes amid weak economic data

Asian shares recouped some of their losses yesterday as investors speculated that the United States Federal Reserve's interest rate hiking programme may be put on hold.

The prospect that the Fed may hold off further rate hikes for some time gained traction after the US service sector expanded less than expected in January.

Earlier this week, data also showed that US manufacturing contracted for the fourth straight month in January.

These fresh signs of economic weakness may cause the Fed to stay its hand, some investors reason.

Ironically, an overnight rally on Wall Street prior to the latest data - spurred on by an oil price recovery to above US$35 a barrel - added to the Asian optimism.

Shanghai rose 1.5 per cent and Hong Kong added 1.01 per cent. Kuala Lumpur put on 1.44 per cent and Sydney closed up 2.12 per cent.

Singapore's benchmark Straits Times Index gained 7.75 points or 0.3 per cent to 2,558.49. Volume rose slightly, with 722.5 million shares worth $764 million changing hands over the entire market.

The rally yesterday is likely just a market blip, said Barclays chief economist Leong Wai Ho, cautioning that speculation over Fed rate hikes is always fickle.

"I still see between one and four hikes this year. But the reality is that, in terms of growth and economic outlook, we are still searching for the bottom, which is proving deeper than expected.

"I believe the US recovery may speed up again in the remainder of the year, but China will remain a global manufacturing drag."

Still, 22 blue-chip stocks closed higher, with Golden Agri-Resources putting on 1.5 cents or 4.17 per cent to 37.5 cents. Noble Group closed up 0.5 cent or 1.61 per cent to 31.5 cents.

The two counters were among the most active yesterday, as Golden Agri-Resources saw 40.5 million shares change hands and Noble had 41.9 million shares transacted.

Singapore Press Holdings also gained, up by seven cents or 1.99 per cent to $3.59. CapitaLand Mall Trust rose two cents or 1 per cent to $2.02 and Ascendas Real Estate Investment Trust closed up one cent or 0.43 per cent at $2.34.

Meanwhile, Hutchison Port Holdings Trust dropped one US cent or 2.15 per cent to 45.5 US cents - the top losing blue chip yesterday despite solid earnings announced overnight.

Singapore Airlines also dropped, losing 10 cents or 0.92 per cent to close at $10.82. The carrier yesterday announced, after market close, a 35.5 per cent year-on-year rise in net profit for the three months to Dec 31 as weak fuel prices helped buffer its earnings.

Outside the STI, Jumbo Group put on one cent or 2.35 per cent to 43.5 cents. The restaurant operator also reported growth in earnings after market close, with net profit rising 24.8 per cent year-on-year in the three months to Dec 31.

A version of this article appeared in the print edition of The Straits Times on February 05, 2016, with the headline 'Asian markets claw back some losses'. Print Edition | Subscribe