Singapore bourse’s a sea of red on US banks’ woes

ALL key Asian markets on Friday (Mar 10) responded to the overnight Wall Street rout with sell-offs, after two US regional banks went public with their financial problems.

Singapore’s blue-chip gauge Straits Times Index (STI) dropped 1.2 per cent or 37.08 points to 3,177.43, with only two counters – Sembcorp Industries and agribusiness Wilmar International – logging gains. Two other component stocks, beverage firms Emperador and Thai Beverage, ended the day flat, while the remaining 26 closed lower.

Sembcorp Industries and Wilmar rose 0.5 per cent and 0.3 per cent respectively to S$3.82 and S$3.94.

The banking trio slid between 0.9 and 2.2 per cent.

The STI declined by 1.7 per cent over the week.

Stephen Innes, managing partner at SPI Asset Management, thinks that the contagion risk from small to large banks in the US is remote. Still, “where there is smoke, there is generally some fire, as the higher rates volatility and a persistent yield-curve inversion are the most unfriendly combination for financials”, he said.

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Before Wall Street ends an eventful week, there is still US non-farm payroll data slated to be published on Friday. The release is likely to feature in the US Federal Reserve’s data-dependent interest-rate decisions.

The US labour market remains one of the most important pieces of the puzzle in the Fed’s monetary policy, private bank LGT noted in a market view published on Friday. “Indeed, low unemployment relative to the overall economic situation is creating additional inflationary pressure through rising wages.”

Across the broader market, gainers trailed decliners 184 to 399, on a trading turnover of 1.4 billion securities with a total transactional value of S$1.2 billion.