Singapore shares fall amid fears of further rate hikes

SINGAPORE – Fears of further rate hikes and budget concerns in the United States unsettled local investors on Wednesday, sending Singapore shares down a notch.

The jittery mood left the Straits Times Index (STI) down 0.1 per cent, or 3.87 points, to 3,214.21. In the broader market, losers beat gainers 295 to 245 after 1.2 billion shares worth $898 million changed hands.

Regional markets were also in the red. Hong Kong’s Hang Seng Index fell 1.6 per cent and Japan’s Nikkei 225 slid 0.9 per cent, while South Korea’s Kospi closed flat. Australian shares had their biggest fall in three weeks, slipping 0.6 per cent.

IG market analyst Yeap Jun Rong noted that expectations of a pause in the Federal Reserve’s rate hikes were “shaken” by hawkish remarks from Fed officials, and a stronger-than-expected purchasing managers’ index (PMI) in the US.

S&P Global’s flash US composite PMI output index rose to a reading of 54.5 in May, from 53.4 in April. A figure above 50 indicates growth.

Mr Yeap also noted further de-risking on Wall Street overnight as the lack of any significant progress in US debt talks led major indexes lower.

“The absence of any signs of progress will likely keep a cautious lid on market sentiments for now, with the VIX jumping 8 per cent overnight, but the sharp moderation in US one-year credit default swaps lately still reflects some optimism of an eventual resolution,” he said.

That unease sent the S&P 500 down 1.1 per cent, while the Nasdaq slipped 1.3 per cent, and the Dow Jones Industrial Average retreated 0.7 per cent. 

CapitaLand Investment was the largest STI gainer, advancing 1.7 per cent to close at $3.51. Genting Singapore was at the bottom of the table, shedding 2 per cent to $1.

The three banks were also in the red. OCBC Bank lost 0.5 per cent to $12.20, UOB dipped 0.4 per cent to $27.83, and DBS Bank fell 0.3 per cent to $31.40. THE BUSINESS TIMES