STI slips after faster rise in core inflation than expected

The Singapore market closed slightly lower yesterday after an unwelcome surprise in the country's inflation figures. Core inflation rose at a faster-than-expected pace to hit a new high of 4.8 per cent last month, the latest consumer price index figures showed.

After the release of the data at 1pm, the Straits Times Index (STI) hit a five-day low of 3,224.98 at about 2.25pm. But the market then took a sharp turn and ended the day just 0.5 per cent lower, at 3,246.21.

The decline tracked regional losses amid continued selling in equity markets on Wall Street. This came ahead of the Jackson Hole symposium starting tomorrow, when the US Federal Reserve is expected to address inflation levels.

Major indexes in Hong Kong, South Korea, Australia and Japan ended 0.8 per cent to 1.2 per cent lower.

UOB's global economics and market research team said that while the surge in core inflation was a surprise, its sources of price pressures were not. The team also noted that the Monetary Authority of Singapore removed its previous expectation for core inflation to peak in the third quarter. "This likely means that core inflation may stay elevated for longer," it said.

Among STI constituents, the biggest losers were Hongkong Land, which slid 2 per cent to US$4.90, and Mapletree Industrial Trust, which fell 1.9 per cent to $2.63.

OCBC extended Monday's losses and closed 0.7 per cent lower, while the other two local banks added to the previous day's gains. UOB rose 0.7 per cent, while DBS ended 0.03 per cent higher.

Sembcorp Industries gained the most, climbing 1.9 per cent to $3.30.

Sembcorp Marine was the most actively traded counter by volume. It closed up 3.6 per cent at 11.5 cents, after 234.8 million shares worth $26.5 million were traded.

In the broader market, losers outnumbered gainers 257 to 222, with 1.57 billion securities worth $1.34 billion changing hands.