US rate hike fears put brakes on rebound

STI retreats in tandem with Wall St and Asian bourses, with Big Three banks leading losers

The Singapore market fell back into the red yesterday on renewed concerns over when the United States might raise interest rates.

The benchmark Straits Times Index (STI) slid 40.15 points, or 1.37 per cent, to 2,888.03, putting a halt to its two-day upswing although it ended the shortened week ahead by 0.8 per cent.

This mirrored overnight sentiment in Wall Street, which dropped 1.45 per cent, with traders kept on edge ahead of the Federal Reserve's policy meeting next week.

Some market watchers, including the World Bank chief economist Kaushik Basu, have called for a delay on any interest rate rise in the United States, given the slowing growth in China.

Others, however, believe the first hike may still come in before the end of the year.

  • Markets highlights

  • 1.  Some of the largest US shale oil producers have already begun slashing 2016 budgets, with some planning double-digit percentage reductions starting in January. A rash of bleak commentaries from the CEOs of these firms has emerged, Reuters reported.

    2.  Memstar Technology has asked for a suspension of its shares. It was looking at a reverse takeover but has hit fund-raising challenges.

    3.  The Land Transport Authority has launched a five-year $650 million bond issue with a 2.73 per cent coupon.  DBS is the sole bookrunner.

    4.  Property group Lian Beng is holding a shareholders' meeting to ask for approval to expand the business to South-east Asia, China, Australia and Britain.

    5.  Global Yellow Pages is proposing a capital reduction exercise of $59.8 million. It relates to losses arising mainly from an impairment in the value of its investment in an associated company.

Volatility was evident across the region as well: Japan fell 2.5 per cent, despite scoring a historic 7.7 per cent surge on Wednesday; Shanghai shed 1.4 per cent, its first decline in three trading days; Hong Kong sank 2.59 per cent.

"Investors are again focusing on the potential US interest-rate increase and how it would impact emerging markets."

At home, the index's losses were driven largely by the three local banks. United Overseas Bank fell 33 cents, or 1.7 per cent, to $19.47; DBS Group lost 24 cents, or 1.3 per cent, to $17.72 and OCBC Bank slipped 12 cents, or 1.3 per cent, to $9.02.

Telco Singtel was also among the day's biggest laggards, shaving five cents or 1.3 per cent to $3.72.

Commodity counters continued to retreat amid the slump in the sector, with Noble Group sinking two cents, or 3.8 per cent, to 51 cents.

Wilmar International lost nine cents or 3.4 per cent to $2.57 and Golden Agri-Resources shed one cent or 3.2 per cent to 30 cents.

"Markets will remain volatile until the Fed meeting next week," Mr Nader Naeimi, head of dynamic asset allocation at AMP Capital Investors, told Bloomberg.

Notably, both Jardine Matheson and agri-business group Olam International finished stronger, reversing their losing streaks for the past few days following news of their impending exit from the STI.

Jardine Matheson rose 70 US cents, or 1.5 per cent, to US$48.70, while Olam climbed 2.5 cents, or 1.3 per cent, to $1.975.

Offshore services provider Ezra Holdings was the day's most active issue, with 40.7 million shares being traded.

The counter fell 0.2 of a cent, or 1.6 per cent, to 12.7 cents.

Overall, 914.3 million shares worth a total of $758.7 million changed hands.

The market is closed today for the General Election.

A version of this article appeared in the print edition of The Straits Times on September 11, 2015, with the headline 'US rate hike fears put brakes on rebound'. Print Edition | Subscribe