Singapore stocks lifted by Fed guidance, Evergrande relief

A buoyant Wall Street overnight and optimism over the Evergrande debt crisis gave regional shares a much-needed lift yesterday and put a spring into investors' steps.

The boost in the United States - major indices were all up around 1 per cent - came largely from the Federal Reserve's hint at a possible interest rate rise but not until late next year. That sent the key Straits Times Index up 28.39 points or 0.93 per cent to 3,076.44. Turnover came in at 1.60 billion units worth $1.24 billion while gainers outpaced losers 319 to 160.

The banks - DBS, OCBC and UOB - plus gains in CapitaLand Investment and Hongkong Land Holdings added nearly 16 index points to the STI. Singtel added 0.41 per cent to $2.48. It said it will exercise its full entitlement to the rights issue of its associate Bharti Airtel.

The US moves hogged the spotlight. US Fed chairman Jerome Powell left monetary policy unchanged but signalled that the central bank could begin cutting bond purchases by November, with the process completed by mid-2022.

OCBC Treasury Research said in a note: "Overall, we view the (Federal Open Market Committee) developments as net hawkish. Mr Powell has given the market enough information to have a clear view of the start and pace of the tapering process, effectively making a pre-announcement."

Default fears over property giant Evergrande Group also somewhat abated. The stock shot up in Hong Kong yesterday and the People's Bank of China made a cash injection into the financial system. Asian markets shrugged off Fitch's downgrade of China growth, preferring instead to focus on Moody's narrative that China will permit faster credit in this half, said Mr Jeffrey Halley, Oanda's Asia-Pacific senior market analyst.

But FXTM's senior research analyst Lukman Otunuga said sentiment is still shaky with Evergrande's debt woes likely to be on investors' minds the rest of the week.