STI sinks 1.4 per cent as Asian markets tumble

SINGAPORE – Local stocks dived on Wednesday amid broad selling across the region after rating agency Fitch downgraded the credit rating of the United States.

The carnage left the benchmark Straits Times Index (STI) down 1.45 per cent, or 48.77 points, at 3,325.02. In the wider market, losers outgunned gainers 420 to 218 on trade of 1.6 billion shares worth $1.3 billion.

Singtel, which was trading ex-dividend, led the STI decliners, sinking 6.8 per cent to $2.46. Sats, down 3.2 per cent to $2.73, and DFI Retail Group, off 2.3 per cent to US$2.58, also saw heavy selling.

Only one STI counter ended higher – Yangzijiang Shipbuilding added 1.3 per cent to $1.57.

DBS was the most active counter by value. The stock fell 1.6 per cent to $33.84 after 4.1 million shares worth $137.8 million were traded.

The other local banks also ended in the red – OCBC fell 1 per cent to $13.19, and UOB ended 0.8 per cent lower at $29.92.

US stocks had a mixed session overnight.

The S&P 500 snapped its lengthy rally to fall 0.3 per cent, the tech-heavy Nasdaq was down 0.4 per cent, and the Dow Jones Industrial Average rose 0.2 per cent.

That set the tone for the region, with indexes in Australia, Japan, Hong Kong and South Korea tumbling between 1.3 per cent and 2.5 per cent, with sentiment hit by

Fitch downgrading the US credit rating to AA+ from AAA.

SPI Asset Management managing partner Stephen Innes noted that the downgrade could hurt mortgage rates and global swaps contracts. “While debt downgrades seldom – if ever – have long legs, investors may pause and let the dust settle before re-entering risk markets,” he said.

“However, within this super market-friendly environment of stable growth and a Federal Reserve close to the end of its hiking cycle creating fertile ground for stock gains, it’s unlikely risk sentiment will wander too far off the soft landing path.”

THE BUSINESS TIMES