Bulls And Bears

STI sees muted trading after US Fed rate cut

Traders in the dark as to Fed's next move; oil counters dip amid weaker crude prices

Local shares fell yesterday after United States monetary policymakers delivered a widely expected interest rate cut, but gave limited insight on their next course of action.

The Straits Times Index (STI) opened higher and moved between positive and negative territory before finishing at 3,158.80, down 8.04 points or 0.25 per cent. Losers outpaced gainers 193 to 163.

Trading activity remained muted, with 845.89 million shares worth $872.93 million changing hands.

The US Federal Reserve cut interest rates overnight by 25 basis points - the second time it has lowered rates this year - but held off on saying if another move is probable.

Market watchers hoping to decipher the Fed's next move were left wanting clues.

Mr Edward Moya, a senior market analyst at Oanda, said the Fed could regret its decision to not be more forthright. "Its lack of conviction in signalling more rate cuts will probably be a policy mistake that is wasting the effectiveness of the first two rate cuts.

"The Fed seems set on waiting for a couple of geopolitical risks to rattle the economy before committing to a full-fledged easing cycle."

Without broad trends to drive prices, yesterday's market made it easy to spot the favourites.

The most active counters here included TEE International, which rose 2.17 per cent to 4.7 cents on turnover of over 40 million shares.

Key investor Phua Chian Kin wants to sell his 23 per cent stake for $9 million or six cents a share.

Mr Phua has come under the spotlight for allegedly instructing unauthorised transactions of $6.55 million made by TEE International subsidiaries to related parties.

Golden Agri-Resources recorded trade of 27 million shares yesterday as it fell 3.92 per cent to 24.5 cents.

Indonesia's prolonged drought has been hurting yield at the palm oil company, which posted a second-quarter net loss and recently told analysts that it was lowering its full-year production guidance.

The STI was also dragged lower by all three local banks, with declines led by United Overseas Bank, which fell 0.77 per cent to $25.70.

Counters with exposure to the oil and gas sector also gave up gains amid weakness in crude prices.

Rig builder Sembcorp Marine lost 1.56 per cent to $1.26, while its parent, Sembcorp Industries, slid 1.38 per cent to $2.15.

GSS Energy, which has oil exploration operations in Indonesia, lost 2.82 per cent to 6.9 cents.

Rex International, which conducts oil exploration in markets such as Oman and the United Arab Emirates, fell 3.41 per cent to 8.5 cents.

A version of this article appeared in the print edition of The Straits Times on September 20, 2019, with the headline 'STI sees muted trading after US Fed rate cut'. Print Edition | Subscribe