Bulls And Bears

Stocks little changed ahead of Fed, BOJ meets

Markets cautious as traders await policy decisions from US, Japan central banks

Singapore equities hardly moved yesterday as traders waited on the sidelines for policy decisions from the United States and Japan.

The Straits Times Index (STI) inched up 2.55 points, or 0.09 per cent, to 2,854.69. Turnover across the bourse amounted to 1.4 billion shares worth $927.8 million. This was much like Wall Street, which shed 0.02 per cent on Monday.

Markets globally have been factoring in a lower chance of a US rate hike at the US Federal Reserve meeting early tomorrow morning, though it is expected to give clues as to the timing of the next one.

Much attention is also on the Bank of Japan's (BOJ's) review today, which could see the central bank step up its monetary stimulus and cut interest rates further into negative territory, said an ABN Amro note.

The same air of caution was seen in other markets in the region: Tokyo slid 0.16 per cent on a stronger yen as it reopened after a holiday while Shanghai eased 0.1 per cent and Hong Kong dipped 0.08 per cent.

"Traders tend to take fewer risks ahead of central bank meetings," said Ms Margaret Yang, a market analyst at CMC Markets.

But she added that both decisions from the US Fed and BOJ, which will set the tone in financial markets, could "potentially bring a lot of volatility".

The STI's performance yesterday was propped up in part by two of the local banks. United Overseas Bank (UOB) put on 17 cents or 0.9 per cent to $18.98, while DBS Group Holdings climbed eight cents or 0.5 per cent to $15.27. OCBC Bank, on the other hand, pared one cent or 0.1 per cent to $8.60.

A Maybank Kim Eng report said it is positive on UOB's digitalisation efforts and expects other banks to play catch-up.

It maintained a "hold" call on the stock, adding that Singapore banks will continue to invest in technology capabilities, with cost rationalisation as priority.

Lower oil prices likely put a dent in energy-related plays, with Sembcorp Industries losing three cents or 1.1 per cent to $2.58. Keppel Corporation erased earlier losses to finish one cent or 0.2 per cent higher at $5.27.

Those outside of the STI were affected as well. Oil services firm Ezra Holdings fell 0.2 cent or 3.8 per cent to five cents, while Ezion Holdings dropped one cent or 3.7 per cent to 26 cents.

Penny stocks continued to dominate most of the action on the exchange. The day's top active was Magnus Energy Group, which closed flat at 0.1 cent with 225.9 million shares changing hands. It was followed by oil and gas play Annica Holdings, also unchanged at 0.1 cent on 160.4 million shares done.

Investment firm ISR Capital, which rocketed 71.1 per cent in heavy trade the day before, sank half a cent or 1.9 per cent to 25.5 cents.

A version of this article appeared in the print edition of The Straits Times on September 21, 2016, with the headline 'Stocks little changed ahead of Fed, BOJ meets '. Print Edition | Subscribe