Bulls And Bears

STI inches up in tandem with the region

US Fed's remark that it will be 'patient' on interest rate moves helps to calm nerves

It wasn't much to write home about but local shares managed to inch up yesterday in line with most regional markets, thanks to dovish comments from the United States Federal Reserve.

The improved mood nudged the Straits Times Index ahead 0.5 per cent or 15.79 points to 3,190.17 with gainers outnumbering losers 228 to 162 on trade of 1.38 billion shares worth $1.33 billion.

The US Fed said overnight that it will be "patient" on any future interest rate moves and signalled flexibility on the path for reducing its balance sheet. The statement, a significant departure from its previous signalling of further gradual rate hikes, helped calm nerves, said analysts.

Local shares were up on broad-based gains with most sectors finishing in the black, except for manufacturing, commerce and transport.

An exception was transport firm ComfortDelGro, which rose as much as 2.6 per cent during the day before closing 2.19 per cent higher at $2.33. Brokerage firms CGS-CIMB, DBS Research and Maybank Kim Eng have "buy" recommendations on the stock.

News of a likely Fed pause in interest rate hikes lifted most Reits. Mapletree Logistics Trust closed up 0.74 per cent at $1.37 and Frasers Logistics & Industrial Trust finished 0.94 per cent higher at $1.08.

Likewise, Ascendas Reit gained 0.74 per cent to $2.74. This also came on the back of news that the trust will develop and manage Grab's new $181.2 million headquarters. Ascendas Reit also posted higher distribution per unit for the third quarter, in line with analyst expectations. OCBC analyst Andy Wong is maintaining his "hold" rating on the counter.

OUE Commercial Reit gained 2.04 per cent to 50 cents on the back of DBS Research upgrading its call to "buy".

The Reit will be an "attractive laggard play" for investors seeking exposure to the upturn in the Singapore office market, said DBS equity analysts.

The Fed's shift in its monetary policy path also saw the US dollar pull back against major currencies, providing support for crude oil prices - a positive for shipyard stocks.

Keppel Corp gained ground, rising 0.49 per cent to $6.10 and Sembcorp Industries rose 0.78 per cent to $2.59, but Sembcorp Marine closed unchanged at $1.60.

With the Fed review out of the picture, US-China trade negotiations will prove the blockbuster to cap off the week.

Negotiations will include a meeting between US President Donald Trump and Chinese Vice-Premier Liu He.

A version of this article appeared in the print edition of The Straits Times on February 01, 2019, with the headline 'STI inches up in tandem with the region'. Print Edition | Subscribe