Hawkish FOMC this week's main feature

THE US Federal Open Markets Committee (FOMC) meeting this week was meant to be a non-event as markets had for several weeks already been expecting an interest rate hike. As it turned out, the Fed lived up to expectations with a 25 basis points rate hike but simultaneously indicated that there could be three more hikes next year instead of the two that markets had forecast.

This unexpected hawkishness brought the sellers out, dragging the Straits Times Index (STI) 23 points lower on Thursday. Even with a 7.09 points rebound on Friday, the STI lost a nett 20 points or 0.7 per cent over the week at 2,937.86.

Liquidity has been a problem throughout the year, the daily average rarely rising significantly above S$1-1.3 billion except on the last days of most months, when odd price movements customarily placed under the broad umbrella of "window dressing" typically take place.