Singapore stocks track Wall Street declines

SINGAPORE - Singapore stocks fell on Friday, tracking Wall Street declines as US Federal Reserve officials remained hawkish on future interest rate hikes. The benchmark Straits Times Index (STI) fell 0.4 per cent or 13.81 points to 3,272.23. In the broader market, losers beat gainers 281 to 260 after 1.2 billion securities worth $1.2 billion changed hands.

Oanda senior market analyst Edward Moya said that US stocks fell after Federal Reserve officials stuck to their hawkish scripts overnight, reigniting recession fears among investors. “Equities extended declines after the latest round of Fed speak reminded us that policymakers could remain very hawkish, despite a downshift to a half-point pace in December,” he said, citing comments overnight from both Kansas City Fed president Esther George and St Louis Federal Reserve president James Bullard, which suggested that interest rates are not tight enough yet.

“I’m looking at a labour market that is so tight, I don’t know how you continue to bring this level of inflation down without having some real slowing, and maybe we even have contraction in the economy to get there,” Ms George said.

Regional markets were mixed on Friday. Japan’s Nikkei 225 fell 0.1 per cent, Hong Kong’s Hang Seng Index declined 0.3 per cent and South Korea’s Kospi rose 0.1 per cent.

On the STI, Thai Beverage Public Company was the best performer, up 1.6 per cent or $0.01 to close at $0.63. This comes after DBS analysts reinstated coverage on the firm with a “buy” call and a target price of $0.84 on Friday. Hongkong Land was at the bottom of the table, shedding 5.3 per cent or US$0.22 to close at US$3.97.

While most of Asia rose, there was a fear that the recent rally may have run a little ahead of itself. “The market believes that inflation is on the downtrend. We also believe that but the fact of inflation having peaked is not a reason for the Fed to turn and cut rates,” said Wells Fargo Investment Institute’s Paul Christopher. “That’s the fundamental disconnect that still exists between the Fed and the market.” THE BUSINESS TIMES