Steady rates by US Fed Reserve boosts markets, STI closes 16 points up

The Straits Times Index closed up 0.64 per cent at 2,562.45 on Thursday, Jan 28, 2016.
The Straits Times Index closed up 0.64 per cent at 2,562.45 on Thursday, Jan 28, 2016.PHOTO: THE BUSINESS TIMES

SINGAPORE - Singapore shares closed higher on a stronger showing in European markets, and after the United States Federal Reserve flagged risks to the US economy from global market turmoil and kept interest rates unchanged.

The Straits Times Index closed up 0.64 per cent or 16.27 points at 2,562.45.

"Given that there was no change in the forward guidance, we think that March is no longer in the Fed's plans. Although... policymakers were forecasting an increase in the federal funds rate in a full percentage point this year in four steps, we think the Fed is no longer sure, ABN Amro said in a report Thursday.

"We think the Fed will not hike rates until June. Markets are now only expecting one rate hike this year," it said.

ABN Amro sees three rate hikes this year, citing downside risks related to the strong US dollar, lower energy prices and falling equity prices.

Gainers included Singtel, Wilmar International and HongKong Land. Singtel rose 1.5 per cent or five cents to S$3.48, with 15.2 million shares traded. Wilmar jumped 4.5 per cent or 12 cents to S$2.77, while HongKong Land climbed 2.2 per cent or 13 cents to S$6.11.

Laggards include DBS, which fell 0.9 per cent or 12 cents to S$13.54 and ComfortDelgro, which slipped 1.4 per cent or four cents to S$2.84.

SingPost, which got queried by the Singapore Exchange, extended losses for a third straight session, shedding 6.5 per cent or nine cents to S$1.30, with 31 million shares traded. This came after its shares fell 4.5 per cent to a 21-month low of S$1.39 on Wednesday following a 1.4 per cent drop on Tuesday.

"In addition to corporate governance issues, there are now concerns over whether they appointed the right auditor to investigate the issues," remisier Alvin Yong said.

SingPost was last queried was on Jan 6, when its stock lost 6.2 per cent in a day.

Mr Ong Kian Lin of RHB Research said he anticipates a "turbulent" first half of the year before a modest rebound in the second half.

"With downward earnings revisions in the ongoing results season and the sharp correction in China equities, the STI has returned -11.7 per cent year to date," he said.

"Singapore's growth prospects are increasingly looking uncertain (with the recent worst manufacturing decline in 14 years), and we do not rule out chances of further earnings downgrades in the coming quarters," Mr Ong added.

Noble Group was the most actively traded, slipping 1.8 per cent or 0.5 cents to 27 cents with 32.9 million shares traded.