Shares fizzle, STI closes 16 points lower after US Fed Reserve announcement

The Straits Times Index closed 0.56 per cent or 16.22 points lower at 2,879.59.
The Straits Times Index closed 0.56 per cent or 16.22 points lower at 2,879.59. PHOTO: AFP

SINGAPORE - Singapore shares ended lower on Friday following a bout of profit taking in the final hour of trade wiped out gains from a relief rally after the US central bank delayed raising interest rates.

The benchmark Straits Times Index closed 0.56 per cent or 16.22 points lower at 2,879.59, dragged down by banking counters.

OCBC shed 1.2 per cent or 11 cents to $9, DBS Group Holding dipped 0.5 per cent or nine cents to $17.33 and United Overseas Bank lost 0.7 per cent or 14 cents to $19.36.

Among the most actively traded counters were Global Logistic Properties, which fell 3.4 per cent or seven cents to $2.01, with 139.8 million shares traded.

Sinarmas Land, the most actively traded counter yesterday, was hit with a query from the Singapore Exchange about the unusual volume of its stock. The counter closed flat at 60 cents, with 152.2 million shares traded. Sinarmas told SGX that it has conducted a share buyback of 149.8 million ordinary shares in its share capital.

"The company has been considering share buybacks due to feedbacks and communication from various stakeholders," it said.

Except for Singapore, Malaysia and Japan, the rest of Asia closed higher on news that the US Federal Reserve kept interest rates unchanged citing worries about the global economy, financial market volatility and sluggish inflation at home.

"The fact that Asian markets were higher today is not indicative of improving risk appetite. On the contrary, the no-change decision by the Fed would perpetuate uncertainty for longer," IG market strategist Bernard Aw said.

"While the dovish stance adopted by the US central bank is seen as supportive for global equities, the flip side is that the Fed is not confident enough of the US economic outlook to raise interest rates. This is probably what is worrying the markets," he said.

Reactions to the delayed hike varied. "My clients were relieved there wasn't a rate hike, and many were bargain hunting the property counters and Reits because the delay will put a short-term lid on the Sibor," remisier Alvin Yong said.

The three-month Singapore interbank offered rate (Sibor), used to set mortgage rates, dipped slightly to 1.13933 per cent from 1.13958 per cent on Monday. The three-month swap offer rate (SOR), which prices commercial loans, has been falling steadily this week to 1.28373 per cent, from 1.56100 per cent on Monday.