STI ends week of relatively quiet trading 19 points lower
THE week just past will probably be remembered for the sudden downgrade of the three Singapore banks, the return of geopolitical tensions after North Korea launched a missile over Japan on Friday and weak economic numbers from China.
For the banks, the selling was most probably because of an increasing realisation that US interest rate hikes may have to be delayed because of hurricane damage and subdued inflation in the US.
Players in Singapore had originally been banking on rising US rates feeding through to the local market and thus benefiting bank earnings via widening net interest margins. These expectations had propelled DBS, UOB and OCBC to multi-year highs over the past few months, along the way sending the Straits Times Index to a two-year high not long ago.
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