Bulls And Bears

STI bucks regional trend ahead of Fed decision

S'pore market lifted by banks; renewed trade concerns weigh on Asian bourses

It was a mixed showing for Asian equities ahead of the US Federal Reserve's October monetary policy decisions, with sentiment wavering on worries that the phase one trade deal between the US and China might not be ready next month.

That said, the local market fared better than its peers yesterday, with the Straits Times Index (STI) once again lifted by the banks and some Jardine companies to close at 3,207.92, up 10.88 points or 0.34 per cent.

Renewed trade worries saw most markets in the Asia-Pacific, such as Australia, China, Hong Kong, Japan and South Korea, posting losses. Like Singapore, Malaysia bucked the trend, edging up 0.1 per cent.

"Any hope of a pre-Federal Open Market Committee equity bounce in Asia was dashed after an unnamed US administration official told Reuters that Washington and Beijing are continuing to work on an interim trade agreement, but it may not be completed in time for the leaders of the two countries to sign in Chile next month," said AxiTrader Asia-Pacific market strategist Stephen Innes.

While investors appeared jittery following this development, it is worth pointing out that the United States and China have made credible strides towards working out a deal and a delay is in no way indicative of a quashed deal. "I guess there was a need for some market correction," one trader said.

That said, markets are mostly priced in when it comes to expectations of a US rate cut, with investors increasingly confident that the US Federal Reserve will deliver its third 25 basis point rate cut of the year.

In Singapore, trading volume stood at 1.06 billion securities, 89 per cent of the daily average in the first nine months of this year. Total turnover was $1.14 billion, 6 per cent over the January-to-September daily average.

Across the market, gainers pipped decliners 200 to 190. Five of the blue-chip index's 30 counters ended in the red. Genting Singapore was the STI's most active, rising 1.1 per cent to 93.5 cents on 28.5 million shares changing hands.

DBS closed up 1.3 per cent to $25.69, OCBC Bank rose 1 per cent to $10.90 while United Overseas Bank ended at $26.60, gaining 0.8 per cent.

National carrier Singapore Airlines added 0.4 per cent to $9.24 after proposing a partnership with Malaysia Airlines that could include revenue sharing on flights, expanding code-share routes, and participation in joint marketing activities to develop tourism.

A version of this article appeared in the print edition of The Straits Times on October 31, 2019, with the headline 'STI bucks regional trend ahead of Fed decision'. Print Edition | Subscribe