Most South-east Asia stocks gain as Fed hints at rate cuts

Under pressure to lower interest rates, the Federal Reserve gave its strongest signal yet that it is preparing to possibly cut rates later this year, while keeping rates steady on Wednesday.

(REUTERS) - Most South-east Asian stock markets edged higher on Thursday (June 20), as dovish comments from the United States Federal Reserve boosted global equities, while signs that Sino-US trade talks were set to resume also helped sentiment.

The Fed on Wednesday signalled interest rate cuts beginning as early as July, saying it was ready to battle growing global and domestic economic risks, in a marked shift in tone since its last policy meeting. The commentary was widely seen as more dovish than expected, sending global stocks higher.

Singapore shares were the top performers in South-east Asia, heading for a fifth winning session in six. Lender DBS Group Holdings was among the top gainers, up 1.5 per cent. Thailand, Malaysia and Vietnam notched modest gains. Meanwhile, market participants keenly await policy decisions from the Philippine and Indonesian central banks due later in the day. 

The Bangko Sentral ng Pilipinas (BSP) is expected cut benchmark rates for the second meeting in a row, though a Reuters poll suggested it would be a close call as policymakers try to strike a balance between supporting growth and curbing inflation pressures.

"After cutting (rates by) 25 bps (basis points) in May, the main uncertainty now is how patient BSP will be in allowing for impact of the latest rate cut to materialise, and we think that another rate cut this week can't be ruled out," analysts at Mizuho Bank said in a note.

Philippine stocks slipped in thin trade as investors adopted a wait-and-watch stance ahead of the central bank's rate decision. Volumes were at a small fraction of their 30-day average. Large-cap industrial stocks accounted for most of the losses, with conglomerates SM Investments Corp and JG Summit Holdings declining 1.9 per cent and 2.1 per cent, respectively. Indonesian stocks inched lower after adding 2.4 per cent in the previous two sessions.