Asian markets take a breather after Fed rate hike prospects dim, STI ends 0.1% lower

The benchmark Straits Times Index closed 0.1 per cent or 2.9 points lower at 2,893.65.
The benchmark Straits Times Index closed 0.1 per cent or 2.9 points lower at 2,893.65.PHOTO: ST FILE

SINGAPORE - A rally in Singapore shares ran out of steam, leaving the index mostly flat, as oil prices went flat and investors focused on fundamentals following lackluster United States economic data on Wednesday.

Asian traders also took a breather after a recent rally, with Tokyo hit by a strong yen following a shock slump in the US service sector that ended prospects of an interest rate rise this month.

The weak reading out of Washington lent support to high-yielding currencies, with the South Korean won sitting at one-year highs.

The prospect of continued ultra-low borrowing costs in the world's top economy was cheered on trading floors, sending the Nasdaq in New York to a record high. The Dow also rallied as investors returned from the Labor Day public holiday. But broad early gains in

Asia petered out and Hong Kong eased 0.2 per cent after a four-day rally, while Shanghai ended flat. Tokyo closed down 0.4 per cent as the yen extended gains against the US dollar following the US PMI reading. Seoul lost 0.2 per cent and Manila was off 1.4 per cent. Sydney edged up 0.2 per cent after data showed the Australian economy expanded broadly in line with forecasts during April-June, marking 25 years of unbroken growth.

The Straits Times Index closed 0.1 per cent or 2.9 points lower at 2,893.65. Banks continued to hold the fort down, with DBS Group up 0.8 per cent or 12 cents to S$15.55, OCBC up 0.2 per cent or two cents to S$8.84, and UOB up 0.2 per cent or three cents to S$18.68. HongKong Land also helped, gaining 1.5 per cent or 10 US cents to US$6.90.

Profit-taking on ComfortDelgro and property counters CapitaLand and City Developments capped upside. The transport operator shed 1.7 per cent or five cents to S$2.89; CapitaLand slipped 1.2 per cent or four cents to S$3.19, and CDL dipped 1.8 per cent or 17 cents to S$9.06.

Signs of slowing growth in the US service sector following weaker than expected jobs data last week reinforced worries about the health of the US economy.

"The rally isn't that convincing because the market was up on expectations of delays in rate hikes rather than good US economic data," Mr Lee Yu Sheng, a dealer with Maybank Kim Eng, said.

"The STI is not far from 2,960 resistance, so there is also some profit taking," he added.

Oil prices were nearly flat, weighed down by a weaker dollar and scepticism that major producers can reach a deal to freeze output. That took the wind out of local oil and gas counters Rex International, which closed flat at 5.4 cents, while Ezion dipped 1.9 per cent or 0.5 cents at 25.5 cents.

Pennies remained the most actively traded counters, with Noble Group flat at 14 cents with 332.7 million shares traded.