US rate hike jitters keep STI in doldrums

Sliding oil prices and Wall Street's 1.8% drop on Friday also weigh on blue chips

Sliding oil prices and jitters ahead of the first United States interest rate hike in nearly a decade kept Singapore shares in the doldrums yesterday.

The Straits Times Index fell 0.69 per cent, or 19.59 points, to 2,815.04, with 953.3 million shares worth $827.8 million changing hands.

Trading volumes were paltry as investors are staying on the sidelines ahead of Thursday's decision on US interest rates.

"It's going to be a jittery week ahead, with no recovery in sight for oil prices, and the Dow collapsed on Friday ahead of the looming rate hike this week," remisier Alvin Yong said.

"We are hoping for anything between 25 and 50 basis points or less. That will be seen as a mosquito bite. Anything more than 50 basis points becomes a tiger's bite."

"If the Fed increases interest rates as we expect, the US dollar could appreciate further, which would further weigh on US dollar-denominated oil prices," ABN Amro said.

Crude fell for a seventh straight session yesterday, leaving Brent below US$38 a barrel, its lowest point since December 2008.

Wall Street's 1.8 per cent drop on Friday also weighed on STI constituents.

Singtel was the leading laggard, sinking 1.3 per cent, or five cents, to $3.79 yesterday, while Keppel Corp fell 2.2 per cent, or 14 cents, to $6.22.

DBS fell 0.5 per cent, or nine cents, to $16.32; OCBC slipped 0.93 per cent, or eight cents, to $8.54; and UOB was flat at $19.16.

Even though expectations are rife for a rate hike this week, there may not be much room for the local banks' net interest margins to rise significantly, DBS Group Research Equity said in a report last week.

Spackman Entertainment was the most actively traded stock, jumping 12.5 per cent, or 1.7 cents, to 15.3 cents, with 41.8 million shares traded.

Other actives included Jiutian Chemical which closed unchanged at 2.2 cents on a volume of 31.7 million shares.

Weaker oil prices took their toll on oil plays, including Ezra, which slipped 4 per cent, or 0.4 cent, to 9.6 cents, with 34.7 million shares traded.

Yangzijiang Shipbuilding fell 3.15 per cent, or 3.5 cents, to $1.075, with 15.4 million shares traded.

Slow demand for palm oil and weak crude prices hit commodity plays. Golden Agri-Resources dropped 1.54 per cent, or 0.5 cent, to 32 cents on a volume of 23 million shares.

Noble Group fell 1.28 per cent, or 0.5 cent, to 38.5 cents with 18.5 million shares changing hands.

Olam International retreated 0.57 per cent, or one cent, to $1.76.

A version of this article appeared in the print edition of The Straits Times on December 15, 2015, with the headline 'US rate hike jitters keep STI in doldrums'. Print Edition | Subscribe