Singapore shares drop 0.6% after US Fed chair’s hawkish testimony
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On Singapore’s Straits Times Index, only five stocks closed higher on Wednesday.
PHOTO: BT FILE
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SINGAPORE – Stark warnings from the US that more interest rate rises are on the way sent Wall Street tumbling overnight and sparked declines across the region on Wednesday.
Investors here were no exception as they rushed for the exit, sending the Straits Times Index (STI) down 0.6 per cent, or 18.41 points, to 3,226.86 in the process.
Only five of the 30 component stocks closed higher, while losers trumped gainers 334 to 199 across the broader market, with 1.5 billion shares worth $1 billion transacted.
The US yield curve became more inverted – a recession indicator – after Federal Reserve chairman Jerome Powell’s hawkish testimony on Tuesday.
He had told the Senate Banking Committee that the US central bank is prepared to react to signs of economic strength by raising interest rates higher than previously expected and potentially returning to a quicker pace of rate increases.
Higher interest rates generally bode well for lenders, but the risks of a recession are also rising.
Singapore’s banking trio had a mixed showing: UOB was marginally up 0.1 per cent to $29.47, DBS Bank slipped 0.4 per cent to $33.71, and OCBC Bank was 1 per cent lower at $12.55.
Real estate investment trusts (Reits) also suffer in a high-rate environment, so it was no surprise that only two of the 40 or so Reits and property trusts listed on the Singapore Exchange – EC World Reit and Far East Hospitality Trust – managed to chalk up gains. Most were down and only a few were unchanged.
EC World Reit units rose 1.5 per cent to 34.5 cents, a day after its manager announced that the sponsor had released more funds from escrow to meet some outstanding mandatory bank repayments.
Ground-handler and in-flight caterer Sats slid 1.6 per cent to $2.46, approaching its 52-week low of $2.355.
The declines on Wednesday can be sheeted home to the bloodshed on Wall Street overnight, when the key Dow Jones Industrial Average dropped nearly 600 points, or 1.7 per cent, in the wake of Mr Powell’s remarks.
The S&P 500 dropped 1.5 per cent while the technology-heavy Nasdaq was off 1.2 per cent.
Most regional markets responded in kind, with the Hang Seng in Hong Kong down 2.35 per cent, the Kospi in Seoul falling 1.28 per cent and Australian shares dropping 0.8 per cent. THE BUSINESS TIMES.
