Singapore, regional shares rallied amid Fed rate speculations and oil recovery

SINGAPORE - Asian shares recouped some of their losses on Thursday (Feb 4), when regional markets also rallied partly on speculations that there will be no further interest rate hike in the United States.

The expectations emerged after the US' service sector activities expanded less than expected in January. Earlier this week, data showed that US manufacturing activities contracted for the fourth straight month in January.

Oil prices recovering overnight to above US$35 per barrel also added to the optimism.

In Greater China, Shanghai rose 1.52 per cent and Hong Kong went up 1.01 per cent. Kuala Lumpur put on 1.44 per cent and Sydney closed up 2 per cent.

Singapore's benchmark Straits Times Index also gained, up 7.75 points or 0.3 per cent to 2,558.49. Volume rose slightly, with 722.5 million shares worth S$764 million changing hands over the entire market.

The rally yesterday is likely just a market blip, Barclays chief economist Leong Wai Ho, cautioning that speculations around Fed rate hike are always very fickle.

"I still see between one to four hikes this year. But the reality is that, in terms of growth and economic outlook, we are still searching for the bottom, which is proving deeper than expected."

22 blue chip stocks were lifted to close higher, with Golden Agri-Resources putting on 1.5 cents or 4.17 per cent to 37.5 cents. Noble Group closed up 0.5 cents or 1.61 per cent to 31.5 cents.

Singapore Press Holdings also gained, ahead seven cents or 1.99 per cent to S$3.59. CapitaLand Mall Trust rose two cents or 1 per cent to S$2.02 and Ascendas Real Estate Investment Trust closed up one cent or 0.43 per cent at S$2.34.

Singapore Reits will again shine in the current uncertain market where investors seek stable yields, DBS Group Research said in a recent note.

Meanwhile, Hutchison Port Holdings Trust dropped one US cent or 2.15 per cent to 45.5 US cents - the top losing blue chip of the day. Singapore Airlines also dropped, losing 10 cents or 0.92 per cent to close at S$10.82.

The carrier announced, after market close, a 35.5 per cent year-on-year rise in net profit for the three months to Dec 31 when weak fuel prices helped buffer its earnings.

But SIA expects the outlook to remain challenging, as economic volatility dampens travel demand while the heated competition in the aviation industry will continue to pressure yields.

whwong@sph.com.sg