Singapore market closes 27 points up amid bets that US Fed may not hike rates

The benchmark Straits Times Index rose 0.94 per cent or 27.07 points to 2,985.81.
The benchmark Straits Times Index rose 0.94 per cent or 27.07 points to 2,985.81.PHOTO: AFP

SINGAPORE - A positive lead from Wall Street and growing bets that the United States Federal Reserve may not raise rates due to disappointing US inflation data and headwinds from a slowing Chinese economy sent Singapore shares up for a second straight session on Thursday.

The benchmark Straits Times Index rose 0.94 per cent or 27.07 points to 2,985.81. Banking counters led the charge, with OCBC up 1.6 per cent or 14 cents to S$9.11, while UOB rose 0.9 per cent or 18 cents to S$19.50.

A spikeup in oil prices also helped fuel Keppel Corp's gain of 3.7 per cent or 25 cents to S$7.07, while Sembcorp Industries rose 4.1 per cent or 14 cents to S$3.52, and Sembcorp Marine climbed 3 per cent or seven cents to S$2.39.

Also actively traded was Singtel, which edged up 0.8 per cent or three cents to S$3.72, with 22.2 million shares changing hands.

"Equity markets have risen despite poor US inflation data, which suggests that their rallies are being fuelled by expectations of continued accommodative monetary environments. The dollar is sliding, while the gold market rose. All three markets point to the fact that investors highly doubt a rate hike could materialize Thursday," Phillip Futures investment analyst Howie Lee said.

"A very dovish FOMC makeup, disappointing US jobs report last month and unsettling market gyrations are all factors for rates to stand pat," he said.

The risk buying continued in Asia on Thursday as investors are "cautiously optimistic" over Fed's decision, IG market strategist Bernard Aw said.

"Further delay in the rate normalisation will suggest that the Fed is still not comfortable with current economic conditions, and more importantly, the outlook for US growth and inflation.

"This will not help reduce uncertainty. The risk-on, risk-off cycle will persist," he said.

"If, however, there is a rate hike, the decision is expected to be accompanied by an emphasis that the normalisation pace will be gradual and calibrated," he said.

gleong@sph.com.sg