Singapore stocks take Fed rate hike in stride; STI ends with slight gains

ASIAN markets were mostly lower on Thursday (Sep 22) after the Federal Reserve’s September meeting.

That’s not only because the US central bank raised interest rates by 75 basis points (bp), which was a move widely expected by the market. Traders were caught off-guard by indications that more rate hikes were coming as the Fed combats soaring inflation.

Regional bourses closed in the red. In mainland China, the Shenzhen bourse fell 0.8 per cent, while the Shanghai Composite Index declined 0.3 per cent. In Hong Kong, the Hang Seng Index lost 1.6 per cent.

Meanwhile, Japan’s Nikkei 225 lost 0.6 per cent and South Korea’s Kospi fell by as much.

Singapore’s Straits Times Index (STI), however, bucked the trend, closing flat with slight gains of 0.04 per cent. The index rose 1.28 points to 3,263.07.

Losers slightly outnumbered gainers 257 to 230, with about 1 billion securities worth S$1.09 billion changing hands.

Ray Sharma-Ong, investment director of multi-asset investment solutions at asset manager abrdn, said he expects a Fed-induced recession, based on comments from Fed chair Jerome Powell on how the pace of rate hikes will only moderate when there is clear evidence that inflation is moving back towards 2 per cent.

“The probability of a hard economic landing has increased, and we would not be surprised if terminal policy rates go up to 5 per cent,” he said.

“We expect markets to eventually price in moderating inflation and recession fears, driven by policy rates pushing deeper into restrictive territory.”

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Singapore shares open Thursday lower after Wall Street slump; STI down 0.4%

Among STI constituents, Sats emerged as the top decliner, falling 5.1 per cent or S$0.21 to S$3.88, after announcing that it was in discussions to acquire air cargo handler Worldwide Flight Services. However, no definitive terms or formal legal documentation, including the purchase consideration, have been agreed upon.

The day’s top performer was Yangzijiang Shipbuilding. Its shares soared, rising 6.8 per cent or S$0.07 to S$1.10.

In the broader market, First Real Estate Investment Trust fell 1.8 per cent or S$0.005 to S$0.27, after it announced that it has agreed to buy 2 nursing homes in Japan for 2.6 billion yen (S$26.3 million) as part of its expansion in a key growth market.