STI limits losses as regional peers take a hit over hawkish Fed signals

Local stocks tumbled along with their regional peers yesterday after comments from the United States Federal Reserve pointed to a series of interest rate hikes sooner rather than later this year.

That ratcheted up the fear factor across the globe and sent investors bailing out although the damage here was limited. The Straits Times Index (STI) restricted losses to a modest 0.35 per cent or 11.54 points to leave the bourse at 3,260.03 by the time a volatile session closed.

Gainers trailed losers 157 to 347 in the broader Singapore market, with 1.37 billion securities worth $1.64 billion changing hands.

South Korean shares saw their sharpest drop since August 2020, with the benchmark Kospi down 3.5 per cent. Japan's Nikkei ended at a 14-month low after it plunged 3.11 per cent - its biggest daily decline since June 21 last year.

It was not much better down under with the Australian share market hitting its lowest levels in 10 months after the benchmark S&P/ASX200 index closed 1.77 per cent lower.

Hong Kong's Hang Seng fell 1.99 per cent while the Shanghai Composite dropped 1.78 per cent.

Two bourses bucked the trend - the Kuala Lumpur Composite edged up 0.02 per cent while Jakarta shares climbed 0.16 per cent.

The US Fed appears to be "more firm" about rate hikes and balance sheet normalisation as inflation becomes more persistent than expected and the job market improves, said DailyFX strategist Margaret Yang. The Fed chair dodged a question at Wednesday's briefing on whether there could be a rate hike at each subsequent meeting this year but he did not rule it out.

The biggest loser among STI constituents was Jardine-owned retail giant Dairy Farm, which fell 4.93 per cent to US$2.70, while Sembcorp Industries led the gainers, rising 1.35 per cent to $2.26. Local banks closed mixed, with UOB up 0.37 per cent at $30.13 and OCBC ahead 0.24 per cent at $12.38, but DBS shed 0.14 per cent to close at $35.26.