Markets cheer Fed's signals on rate hike

STI closes 33.75 points up following clear sign US interest rates will go up next month

Local shares joined the regional rally and enjoyed their strongest rebound in over a week after the latest indication, the clearest yet, on the timing of a United States interest rate hike.

The minutes from the Federal Reserve's meeting last month, released on Wednesday, suggested strongly that rates would be ready to go up next month.

That certainty was welcomed on Wall Street with the Dow Jones Industrial Average up by 1.42 per cent overnight, and all major Asian markets took the cue yesterday to pull in sizeable gains.

Shanghai rose 1.36 per cent, Hong Kong gained 1.41 per cent and Tokyo added 1.07 per cent.

Singapore's benchmark Straits Times Index did not miss the bandwagon, closing up 33.75 points or 1.17 per cent to 2,919.83.

The clarity on the rate hike's timing could not have come a moment too soon, IG market analyst Bernard Aw told The Straits Times. "We're all fed up with the back-and-forth knee-jerk reactions that the markets went through every time there was a rumour. We need to... focus on the fundamentals of growth."

Meanwhile, investors will also want to get a sense of Europe's economic conditions at the next European Central Bank meeting early next month, Mr Aw added.

Still, yesterday's session reflected plenty of bright spots. The overall market saw 981.9 million shares worth $706.6 million transacted, implying strong activity away from the blue chips as investors sought trading opportunities in the cheaper small and mid-cap segment.

The top active counter was Spackman Entertainment Group, up one cent or 7.25 per cent to 14.8 cents. The film company continued to stay hot, with about 140.7 million shares changing hands following news on earnings improvement and strong box office results in Korea.

Seafood restaurant operator Jumbo Group, which debuted on the Catalist board last week, put on 7.5 cents or 24.19 per cent to 38.5 cents.

CapitaLand gained the most of the STI stocks, up eight cents or 2.61 per cent to $3.15, while Jardine Cycle & Carriage rose 75 cents or 2.35 per cent to $32.70.

All three banks closed higher. DBS was up 19 cents or 1.13 per cent to $17, OCBC rose 13 cents or 1.47 per cent to close at $8.95, and United Overseas Bank gained 38 cents or 1.93 per cent to $20.02.

Meanwhile, only four blue chips ended the day lower. Thai Beverage lost the most among the bunch, down 0.5 cent or 0.74 per cent to 67 cents. SIA Engineering pared two cents or 0.53 per cent to $3.72, Sembcorp Marine dropped one cent or 0.45 per cent to $2.19, and Singapore Press Holdings closed down one cent or 0.25 per cent to $3.99.

Sembcorp Marine announced yesterday that its subsidiary had secured an order to design and build a new floating, storage and offloading vessel for Modec. The contract value was not revealed.

A version of this article appeared in the print edition of The Straits Times on November 20, 2015, with the headline 'Markets cheer Fed's signals on rate hike'. Subscribe