STI up 0.9% as regional stocks rise on strong US retail sales data

SINGAPORE - Shares on the Singapore bourse rose on March 18 amid gains in regional indexes, buoyed by better-than-expected US retail sales data, as markets awaited a US Federal Reserve decision later this week.

US retail sales for February rose 0.2 per cent, marking an improvement from January’s 1.2 per cent decline.

While the Fed is widely expected to keep interest rates unchanged, the focus will be on chairman Jerome Powell’s comments about the impact of tariff uncertainty on the US economy.

This positive sentiment was mirrored in Asian markets, with regional stock indexes ending higher on Tuesday.

Hong Kong’s Hang Seng Index rose 2.5 per cent, Japan’s Nikkei 225 ended 1.2 per cent higher and South Korea’s Kospi was up 0.1 per cent.

Back home, the benchmark Straits Times Index (STI) advanced 35.61 points or 0.9 per cent to close at 3,894.97. Across the broader market, gainers outnumbered losers 362 to 174, as 1.3 billion shares worth $1.4 billion changed hands.

Offshore and marine specialist Seatrium was the top STI gainer, up 2.8 per cent or six cents to $2.18.

The biggest decliner on the index was CapitaLand Integrated Commercial Trust, which slid 0.9 per cent or two cents to $2.10.

The trust’s manager on March 17 said deputy chief executive officer Tan Choon Siang would take on the roles of chief executive officer and executive non-independent director from May 1.

The three local banks all rose: DBS Bank rose 1.5 per cent or 67 cents to $45.03, UOB was up 1 per cent or 37 cents at $37.35, and OCBC Bank gained 1.5 per cent or 25 cents to $16.86.

Mr Yeap Jun Rong, market strategist at IG, said in a note on March 18 that while the US retail sales rise of 0.2 per cent fell short of the 0.6 per cent consensus, market participants found comfort in the stronger-than-expected 1 per cent jump in the gross domestic product-relevant “control group”, which alleviated concerns about a severe slowdown in consumer spending.

He noted that “while recession chatter may seem overblown for now, the US economy remains on a slowing trajectory, keeping valuations under close scrutiny”. The preference for relatively cheaper value stocks over growth stocks continues to be the favoured approach, he added.

Mr Yeap pointed out that the US dollar continues to weaken, pressured by softer US retail sales data, which has heightened expectations of a more dovish Fed.

“At the FOMC meeting this week, policymakers are widely expected to keep Fed funds rate unchanged, but will likely signal an increased openness to rate cuts in response to growth risks,” he said, referring to the Federal Open Market Committee.

Mr Yeap sees China’s plans to strengthen domestic demand boosting broader sentiment. While policy support has been more structural than direct, these efforts “mark a step in the right direction, with room for more policy ramp-up further down the road”, Mr Yeap added. THE BUSINESS TIMES