Singapore shares rise on lower US inflation, rate-cut possibility; STI up 0.5%

SINGAPORE – Better inflation data from the United States and the prospect of interest rate cuts gave local investors a much-needed incentive to send shares higher on June 13.

The optimistic mood left the Straits Times Index (STI) up 0.5 per cent or 17.09 points to 3,324.53, with gainers outpacing losers 334 to 238 on trade of 1.3 billion shares worth $858.1 million.

Regional markets put up a mixed showing. Japan’s Nikkei 225 shed 0.4 per cent, while both the Hang Seng in Hong Kong and South Korea’s Kospi gained 1 per cent.

Australian shares added 0.4 per cent on the back of rallying tech stocks.

Wall Street was more buoyant with the S&P 500 and the Nasdaq both hitting new records on expectations that easing inflation will bring rate cuts in 2024. The S&P 500 rose 0.9 per cent while the tech-heavy Nasdaq surged 1.5 per cent, but the Dow Jones Industrial Average inched down 0.1 per cent.

A DBS Bank research note on June 13 noted that the lower-than-expected May inflation data released in the US overnight was another sign showing progress on disinflation. Furthermore, Federal Reserve chairman Jerome Powell hinted that the reading was not reflected in the Fed’s projection of one interest rate cut in 2024, and that it was still open to making two cuts within the year, they noted.

“Support for a ‘high for longer’ backdrop from index heavyweight banks may prove to be temporary, should subsequent inflation or employment data points affirm the path towards disinflation, and open the possibility of a second rate cut (in 2024),” the DBS analysts added.

Yangzijiang Shipbuilding was the STI’s top performer, rising 1.7 per cent to $2.45, while Thai Beverage was the laggard, falling 2 per cent to 48 cents.

The three banks were in the black. UOB gained 0.5 per cent to $30.79, OCBC Bank added 0.5 per cent to $14.30, and DBS rose 0.5 per cent to $35.84.