Asia markets tumble on Fed signal towards March rate hike, STI down 0.35%

SINGAPORE stocks tumbled along with peers in the broader region on Thursday (Jan 27), with the Straits Times Index (STI) sinking 0.35 per cent or 11.54 points to close at 3,260.03, after a volatile session.

Asian equities tanked after the closely-watched Federal Open Market Committee meeting on Wednesday fanned fears that higher interest rates would come as early as March.

South Korean shares saw their sharpest drop since August 2020, with the bencmark Kopsi down 3.5 per cent, or 94.75 points. Japan's Nikkei index ended at a 14-month low, with its share average losing 3.11 per cent. This was also its biggest daily decline since June 21 last year.

In Hong Kong, the Hang Seng Index fell 1.99 per cent while the Shanghai Composite Index fell 1.78 per cent.

Bucking the trend were the Kuala Lumpur Composite Index, which edged up 0.02 per cent, and the Jakarta Composite Index, which climbed 0.16 per cent.

The Fed appears to be "more firm" about rate hikes and balance sheet normalisation as inflation becomes more persistent than expected and the job market continues to improve, said DailyFX strategist Margaret Yang.

At Wednesday's meeting, Fed chair Jerome Powell dodged a question from the media on whether there could be a rate hike at each subsequent meeting this year but he did not rule out the suggestion.

Gainers trailed losers 157 to 347 in the broader Singapore market, with 1.37 billion securities worth S$1.64 billion changing hands.

The biggest loser among STI constituents was Jardine-owned retail giant Dairy Farm D01, which fell 4.93 per cent or US$0.14 to end at US$2.70. At the top of the table was Sembcorp Industries U96 , which closed up 1.35 per cent or S$0.03 at S$2.26.

The trio of local banks closed mixed, with UOB U11 up 0.37 per cent or S$0.11 at S$30.13 and OCBC O39 up 0.24 per cent or S$0.03 at S$12.38. DBS D05 shed 0.14 per cent or S$0.05 to close at S$35.26.