Singapore, Asia markets lifted on BOJ rate hike; STI rises 0.4%

SINGAPORE – A surprise move by Japan’s central bank to raise interest rates despite the country’s lacklustre economy gave regional shares a boost on July 31.

Local investors responded by sending the Straits Times Index (STI) up 0.4 per cent, or 14.17 points, to 3,455.94. Across the broader market, gainers thrashed decliners 363 to 198 on trade of 1.1 billion securities worth $1.2 billion.

Moody’s Analytics senior economist Stefan Angrick said the Bank of Japan (BOJ) rate hike – only its second since 2007 – “sits uncomfortably with the poor run of economic data and lack of demand-driven inflation”.

“With markets now firmly pricing in a (US) rate cut in September, the BOJ may have concluded that the window for rate hikes is closing faster than expected, prompting action now,” he said. “But it doesn’t change the fact that it is hiking into a weak economy.”

Key regional indexes were solidly in the black after the news. Hong Kong’s Hang Seng jumped 2 per cent, South Korea’s Kospi climbed 1.2 per cent, the Nikkei 225 in Tokyo added 1.5 per cent, while Malaysian shares ended 0.9 per cent higher.

Australia’s market shot up 1.75 per cent to a record high after lower-than-expected inflation data raised hopes of interest rate cuts.

The robust regional showing came after a mixed session on Wall Street overnight with once high-flying tech stocks again under pressure. The Nasdaq fell 1.3 per cent and the S&P 500 was down 0.5 per cent, but the Dow Jones Industrial Average, which includes only a few tech stocks, rose 0.5 per cent.

The STI’s top performer was marine player Seatrium, up 4.3 per cent to $1.68, while Mapletree Logistics Trust led the laggards, dropping 1.5 per cent to $1.29.

The local banks rose: DBS Bank was up 0.1 per cent to $36.59; OCBC Bank climbed 0.3 per cent to $14.85; and UOB, which releases second-quarter results on Aug 1, added 0.3 per cent to $32.35.

THE BUSINESS TIMES