Bulls And Bears

Asia rallies on hopes of US rate hike delay

Region's markets take cue from Wall Street after Fed chair says rises should be gradual

Asian markets racked up solid gains yesterday on hopes that expected interest rate hikes in the United States will be delayed.

The rally mirrored the upbeat sentiment on Wall Street, which rose 0.64 per cent overnight after Federal Reserve chair Janet Yellen said that she remains optimistic about US economic growth and that rate increases should come "gradually".

The Straits Times Index (STI) added 16.81 points, or 0.59 per cent, to 2,848.09. Hong Kong led the region-wide rally with a 1.42 per cent gain, while Tokyo climbed 0.58 per cent and Seoul jumped 1.3 per cent.

But Shanghai was nearly flat, inching up just 0.07 per cent ahead of May trade data out today.

"Singapore actually did quite well today; it managed to maintain its strength through the day," said remisier Desmond Leong.

"Markets are taking in the possibility of the rate hike being pushed to July, when the Fed had previously been gearing them up for one in June," he noted. "But June or July - it's not a lot of difference. Eventually the Fed will have to raise it, probably once or twice this year. It's just a matter of when."

Of the 30 STI constituents, 18 closed higher while six fell into the red.

Oil- and gas-related plays were among the day's biggest winners as crude prices held steady at more than US$50 a barrel. Sembcorp Marine surged 10.5 cents or 6.6 per cent to $1.685, while parent firm Sembcorp Industries jumped nine cents or 3.2 per cent to $2.90. Keppel Corporation rose eight cents or 1.5 per cent to $5.46.

However, Maybank Kim Eng said in a recent report that it remains bearish on the offshore and marine sector, given that most companies do not expect a meaningful recovery in activities before 2017, noting that it is "not time to turn positive on the builders if their clients continue to be restrained".

Those in the commodity sector also did well. Golden Agri-Resources gained one cent or 2.6 per cent to 39.5 cents, while Wilmar International advanced four cents or 1.2 per cent to $3.42.

On the other hand, StarHub lost five cents or 1.4 per cent to $3.60 and Singapore Airlines eased eight cents or 0.8 per cent to $10.57.

Offshore company Swiber Holdings jumped 0.7 cent or 4.1 per cent to 17.9 cents after announcing in the morning that it has bagged three new contracts for projects worth US$215 million (S$291 million) in the Middle East and South-east Asia.

Best World International extended its winning streak, jumping 8.5 cents or 6.5 per cent to $1.39 on talk that it may soon announce a share placement with strategic investors, according to a NetAsia Research report.

The top active was property development and investment company Cedar Strategic Holdings, which closed flat at 0.3 cent on a turnover of 440.7 million shares.

A version of this article appeared in the print edition of The Straits Times on June 08, 2016, with the headline 'Asia rallies on hopes of US rate hike delay'. Print Edition | Subscribe