Bulls And Bears

STI down amid caution over Fed meeting

Caution set in ahead of the US Federal Reserve meeting this week, with investors wary of getting caught up in market jitters that may follow.
Caution set in ahead of the US Federal Reserve meeting this week, with investors wary of getting caught up in market jitters that may follow.PHOTO: REUTERS

Markets wait to get hint of US central bank's thinking - will its outlook be bullish or bearish

Singapore shares ended lower yesterday even as oil prices surged and the bull charge on Wall Street continued.

Caution set in ahead of the US Federal Reserve meeting this week, with investors wary of getting caught up in market jitters that may follow despite the wide consensus that the Fed will unveil a rate hike.

As a result, the benchmark Straits Times Index (STI) ended in the red for the third straight session, dropping 3.94 points or 0.13 per cent to 2,952.19. Still, the session was lively,with 1.59 billion shares worth $1.16 billion changing hands.

The Fed meeting today and tomorrow is not just about a rate hike, Bank of Singapore chief investment officer Johan Jooste said. "Market expectations are more or less uniform in predicting a 25-basis-point hike. More intriguingly, we await whatever new words are added or deleted from the (Fed) statement to get a hint of what it's thinking."

He added: "Will they validate the market's bullish assessment of the economic outlook, or will they strike a more cautious tone?"

In China, sentiment took a hit from a regulatory move to ban Evergrande Life from investing in stocks in a bid to curb insurer speculation. Shanghai sank 2.47 per cent.

Tokyo rose 0.84 per cent, following a 0.72 per cent gain by the Dow Jones Industrial Average last Friday to yet another new high.

Fifteen of the 30 STI stocks slid, with Genting Singapore losing the most. The gaming counter shed 2.5 cents or 2.55 per cent to 95.5 cents on 33.3 million shares traded. But Genting is still up 10.4 per cent for the past month, and further profit- taking is likely.

Among banks, OCBC fell 13 cents or 1.4 per cent to $9.13, and DBS Group Holdings was off 16 cents or 0.90 per cent to $17.67. United Overseas Bank rose six cents or 0.29 per cent to $20.96.

There was some excitement in the offshore and marine sector, with Brent crude futures surging about 4 per cent to above US$56 a barrel - its highest since mid-2015. This followed the agreement over the weekend by non-Opec states to join the production cut.

Keppel Corp was the top performer among the 10 STI gainers, adding 35 cents or 5.9 per cent to $6.28 on 18.4 million shares traded, and Sembcorp Industries jumped eight cents or 2.75 per cent to $2.99.

Oil-related stocks outside the benchmark were also fired up. Ezion Holdings added three cents or 8 per cent to 40.5 cents, and Ezra Holdings charged up 1.2 cents or 27.27 per cent to 5.6 cents.

KGI Securities Singapore strategist Nicholas Teo cheered the year- end trading opportunity but warned of the tenuous supply and demand balance. "On the supply side, the US shale producers remain attentive in the shadows, ironically ready to fill the gaps left by Opec's intended cuts… For some, it's starting to make economic sense to turn on the pumps again."

A version of this article appeared in the print edition of The Straits Times on December 13, 2016, with the headline 'STI down amid caution over Fed meeting'. Print Edition | Subscribe