Market treads water on expected Wall St fall

THE Straits Times Index on Monday tracked movements in the Dow futures throughout the day, eventually ending a net 0.83 point lower at 3,121.51. Turnover dropped sharply from last week's S$1.5 billion average to 2.6 billion units worth S$1.08 billion and excluding warrants, there were 234 rises versus 256 falls.

At 5pm, the Dow futures stood 66 points weaker, possibly as the market comes to grips with rising US interest rate expectations. In the federal funds futures market, the implied probability of a 25 basis point interest rate hike at the March 14-15 Federal Open Market Committee (FOMC) meeting is now 96 per cent compared to 90 per cent last Friday and 40 per cent last Monday.

The prospect of higher interest rates has fuelled a rally in the banks on the assumption that their earnings will improve. Macquarie Warrants said in its Monday daily newsletter that Macquarie Equities Research or MQ has a positive view of the Singapore banks, with DBS as the top pick with a target price of S$21.