STI up 0.5% on optimism over lower Fed rates
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Investors here took cheer and sent the STI up 0.5 per cent or 15.57 points to 3,304.99.
PHOTO: ST FILE
Tay Peck Gek
SINGAPORE – Local shares rebounded on May 16 in tandem with most regional bourses after a positive inflation report sparked a record-breaking session on Wall Street overnight.
The moderation in US consumer prices in April underpinned expectations that inflation is being tamed and the Federal Reserve would soon lower interest rates.
Investors here took cheer and sent the Straits Times Index (STI) up 0.5 per cent or 15.57 points to 3,304.99, with gainers beating decliners 333 to 289 on trade of 1.4 billion securities worth $1.5 billion.
DBS Group Research struck a cautious note: “Taken together, a decent (US consumer price index) reading and a downside surprise in retail sales suggest that conditions are perhaps not quite as ‘Goldilocks’ as the market is trading.
“In any case, there is no firm conclusion to be drawn from this data, and market participants are sufficiently satisfied to keep the soft-landing narrative going, buoying risk sentiment in the process.”
Wall Street was confident about rate cuts ahead, with all three major indexes closing at record levels.
It was the first time the S&P 500, Dow Jones Industrial Average and Nasdaq logged all-time highs on the same day since March 21.
Meanwhile, the knee-jerk reaction on May 15 to the impending deletion of five STI stocks from the MSCI Singapore index presented a buy-the-dip opportunity for Seatrium, City Developments, Jardine Cycle & Carriage, Mapletree Logistics Trust and Mapletree Pan Asia Commercial Trust.
These stocks closed 0.5 per cent to 4.1 per cent higher, a stark turnaround from May 15, when they fell between 1.6 per cent and 11.7 per cent.
Singapore Airlines slid 1.2 per cent at $6.73, despite posting record full-year earnings of $2.7 billion.
“Core net profits likely peaked due to margin erosion,” said DBS Equity Research, which has a target price of $6.10 on the stock, with a “hold” recommendation.
Genting Singapore was at the bottom of the STI performance tally, losing 2.2 per cent to 90.5 cents. THE BUSINESS TIMES
