Bulls And Bears

Asia markets end higher ahead of Fed meeting

Investors adjust portfolios before expected rate cut by US central bank

Asian markets were broadly higher ahead of an expected rate cut by the Federal Reserve as investors plotted portfolio adjustments before the US central bank's meeting today.

The Straits Times Index (STI) spent most of yesterday near neutral before eking out a gain of 4.15 points, or 0.1 per cent, to close at 3,350.54.

"There had also been a noticeable evasion to safety trend with the defensives mostly faring better than the cyclicals," IG market strategist Pan Jingyi said of the trading session here.

Markets in Australia, China, Hong Kong, Japan and South Korea all closed higher. Among them, Australia's ASX 200 gained 9.3 points, or 0.3 per cent, to 6,845.10, an all-time closing high for the index. Malaysia was closed.

Yesterday, the Bank of Japan left interest rates, asset purchases and policy guidance unchanged.

In Singapore, trading volume was at 1.17 billion securities, just under the daily average in the first six months of this year. Total turnover came to $1.1 billion, 4 per cent over the January-to-June daily average.

Across the broader market, decliners beat advancers 214 to 182, while the blue-chip index had 11 of its 30 components closing in the red.

In a note on Monday, Citi Research wrote that demand from Asian investors for defensive yield names, such as those in telecommunications, was revived due to growth uncertainties and a lower interest rate outlook.

Singtel was the local market's most active counter, advancing 7 cents, or 2.1 per cent, to $3.37 on 47.3 million shares traded.

Citi said: "Singtel remained topical for investors, with investors noting operational improvements in India, Indonesia, Australia and Thailand."

Singtel and its Indian associate Bharti Airtel are among Citi's top telco picks.

Other defensively positioned blue chips that saw increased activity included ComfortDelGro (up 6 cents, or 2.2 per cent, to $2.82) and ST Engineering (up 2 cents, or 0.5 per cent, to $4.32).

As more central banks take a dovish hue, some investors here have shifted interest from local government bonds to higher-yielding plays. Purchases of Singapore Savings Bonds fell by more than 60 per cent this month from the preceding month as the yield of 10-year government-issued paper dropped from 1.93 per cent to 1.68 per cent.

Among STI components, bourse operator Singapore Exchange (down 0.4 per cent to $7.95) and national carrier Singapore Airlines (up 0.4 per cent to $9.72) are due to report earnings for the April-June quarter today.

A version of this article appeared in the print edition of The Straits Times on July 31, 2019, with the headline 'Asia markets end higher ahead of Fed meeting'. Print Edition | Subscribe