Fed's possible December lift-off hammers investor sentiment, STI slides 39 points

The STI dropped 1.28 per cent to 3,001.51 on Thursday, Oct 29, 2015, on news that the US Federal Reserve may raise interest rates as soon as in December.
The STI dropped 1.28 per cent to 3,001.51 on Thursday, Oct 29, 2015, on news that the US Federal Reserve may raise interest rates as soon as in December. PHOTO: REUTERS

SINGAPORE - Local shares moved deeper into the doldrums for the third straight day on Thursday as the possibility of imminent interest rate hikes in the United States unnerved investors.

The gloomy mood left the Straits Times Index (STI) down 39 points, or 1.28 per cent, to 3,001.51.

The slide came despite investor confidence surging on Wall Street, which jumped 1.13 per cent overnight, buoyed by news that the US Federal Reserve may raise rates as soon as in December.

"The impression the Fed left is that December is still on the table, they didn't close the door to that," Mr Russ Koesterich, a global chief investment strategist at BlackRock, the world's largest money manager, told Bloomberg.

"The main takeaway is the Fed is managing their (options) and if we get a few good economic data points, then December is possible."

Markets elsewhere in the region turned in a mixed bag: Shanghai climbed 0.36 per cent as China's leaders wrapped up a key policy meeting, while Hong Kong slipped 0.6 per cent.

Tokyo inched up 0.17 per cent, Seoul dipped 0.41 per cent and Sydney fell 1.28 per cent.

At home, the day's biggest laggards included aerospace and defence conglomerate ST Engineering, which lost 11 cents or 3.27 per cent to $3.25.

Commodity trading giant Noble Group also fared poorly, sinking 1.5 cents or 2.8 per cent to 52 cents. The stock was again the day's most actively traded, with 83.4 million shares being moved.

OCBC Bank continued to lose ground for the second day, falling 12 cents or 1.3 per cent to $9.08. This was after it announced on Tuesday a 27 per cent year-on-year drop in its third-quarter results to $902 million.

DBS Group Holdings shed 12 cents or 0.69 per cent to $17.33, while United Overseas Bank was the only outlier among the banks among the blue chips, edging up four cents or 0.2 per cent to $20.04.

Telco group Singtel was down eight cents or 1.98 per cent to $3.97.

Outside of the STI, construction, property and engineering group Koh Brothers added one cent or 3.39 per cent to 30.5 cents, after announcing it has secured a $1.12 billion project from Changi Airport Group for development work at the Changi Airport.

Some of the hospitality real estate investment trusts (Reit) also performed well. CDL Hospitality Trust rose half a cent or 0.36 per cent to $1.40, despite posting a 9.7 per cent drop in distribution per unit (DPU) to 2.36 cents for the third quarter, while Frasers Hospitality Trust gained half a cent or 0.65 per cent to 77.5 cents, after reporting a DPU of 1.66 cents for the quarter.

tsjwoo@sph.com.sg