Bulls And Bears

STI ends slightly up amid regional gloom sparked by Fed rate hike

* Regional bourses fall 0.3-1.6%; Australia closed for holiday * YZJ Shipbuilding up 6.8%; Sats top decliner among STI stocks * Local barometer up 0.04% with losers ahead of gainers 257-230

Local shares defied the regional gloom triggered by interest rate concerns in the United States to record a tiny rise yesterday.

It certainly wasn't anything to write home about: the Straits Times Index (STI) inched up 0.04 per cent or 1.28 points to 3,263.07 with losers slightly outnumbering gainers 257 to 230 on trade of 1.02 billion securities worth $1.09 billion.

At the Federal Reserve's September meeting, the US central bank raised interest rates by 75 basis points. That was widely expected by the market but what caught traders off-guard were the indications that more rate hikes were coming as the Fed combats soaring inflation.

Regional bourses took a hit. Shenzhen fell 0.8 per cent, while the Shanghai Composite declined 0.3 per cent and Hong Kong's Hang Seng lost 1.6 per cent. There were 0.6 per cent drops on Japan's Nikkei 225 and South Korea's Kospi while the Australian market was closed for a holiday.

Mr Ray Sharma-Ong at asset manager Aberdeen expects a Fed-induced recession, based on comments from Fed chair Jerome Powell on how rate hikes will only moderate when there is clear evidence that inflation is moving back towards 2 per cent.

"The probability of a hard landing has increased, and we would not be surprised if terminal policy rates go up to 5 per cent," he added. "We expect markets to eventually price in moderating inflation and recession fears, driven by policy rates pushing deeper into restrictive territory."

Sats was the top decliner among STI constituents, falling 5.1 per cent to $3.88 after announcing that it was in talks to acquire air cargo handler Worldwide Flight Services. Yangzijiang Shipbuilding soared, rising 6.8 per cent to $1.10.

First Real Estate Investment Trust fell 1.8 per cent to 27 cents after announcing that it will buy two nursing homes in Japan for 2.6 billion yen (S$25.8 million).

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A version of this article appeared in the print edition of The Straits Times on September 23, 2022, with the headline STI ends slightly up amid regional gloom sparked by Fed rate hike. Subscribe