Asian markets weaken due to fears of hawkish Fed; Singapore stocks close flat

MARKET sentiment in Asia cooled as investors continue pricing in a more aggressive Federal Reserve tightening ahead.

Still, the Straits Times Index bucked the regional trend, rising by 3.90 points or 0.12 per cent to close at 3,283.94.

Across the Singapore market, decliners beat advancers 267 to 185 after 1.34 billion shares worth S$1.22 billion changed hands

Meanwhile in Asia, regional markets were mostly in the red. Japan's Nikkei 225 closed down 2.8 per cent, while South Korea's Kospi fell 0.8 per cent. Jakarta Composite Index fell 0.3 per cent while the Kuala Lumpur Composite Index fell 0.8 per cent. Hong Kong's Hang Seng Index rose 0.1 per cent.

IG market strategist Yeap Jun Rong said that regional investors appear concerned that economic momentum may be capped as markets price in a more aggressive Fed tightening.

"With the Federal Open Market Committee meeting next week, a January hike seems to be off the table but any surprise tightening in the meeting will be a strong hawkish tilt and may add to market risks," he said.

Yeap also noted that the spread of Covid-19 in the region has added some near-term risk as tighter measures were implemented in Japan and the Chinese New Year travel season in China begins.

On the Straits Times Index, Sembcorp Industries U96 was the best performer, climbing by 3.3 per cent or S$0.07 to close at S$2.20.

Jardine Matheson Holdings J36 was at the bottom of the table, falling by 1 per cent or US$0.58 to close at US$58.54.

The three local banks were mixed, with UOB U11 falling by 0.3 per cent or S$0.09 to close at S$29.89 and OCBC O39 shedding 0.2 per cent or S$0.02 to close at S$12.23. On the other hand, DBS D05 rose 0.03 per cent or S$0.01 to close at S$35.93.