STI dips 0.23% ahead of FOMC rate move

SINGAPORE shares fell marginally on Wednesday (May 4) on muted trading after a 2-day public holiday break and ahead of the Federal Open Market Committee (FOMC) decision on a rate hike tonight.

The key Straits Times Index (STI) retreated 7.63 points or 0.2 per cent to 3,349.27, snapping a winning streak over two straight days last week. Trading was muted following a choppy session overnight in Wall Street as investors mostly stood in the sidelines as they awaited the FOMC move.

Markets in mainland China, Japan, Malaysia, Indonesia, and Thailand are closed today.

Markets have fully priced in a 50 basis point hike by the US Federal Reserve and expect another half point rate hike each for June, July and September. Jeffrey Halley, OANDA's senior market analyst for Asia Pacific said: "Whether the Fed hikes by 0.5 per cent - or not - has been analysed to death. The crux will be the statement and the Fed’s forward guidance on the path of interest rates." This is key as it will shape market expectations going forward.

Halley also pointed out that while inflationary pressures persist, as is the case in much of the world, there are no conclusive signs yet that the US economy is slowing down materially.

Global macro conditions have become more challenging on the back of the Russia-Ukraine war and the demand and supply shock emanating from China as the world's second largest economy tightens restrictions to combat rising Covid-19 cases.

China is set to release Caixin Services purchasing managers' index (PMI) on Thursday, which will be closely watched given the lockdown impact on retail and other service sectors.

"The month of May should be lacklustre at best, as the Singapore Exchange usually shifts into a seasonally weak period from May till August. We think this year is no exception, especially with rate hikes, inflation, and supply chain disruption woes," remarked DBS Group Research in a report issued on Wednesday.  The house expects the STI to trade rangebound between support at 3,200 to 3,250 with near-term resistance at 3,408.

Turnover on the local bourse stood at 1.63 billion units worth S$1.57 billion. Losers outpaced gainers with 315 counters down and 183, up. Losses in the key index were led by Capitaland Investment , UOL Group and Yangzjijiang Financial Holding.

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Singapore shares rise at Wednesday’s open; STI up 0.1%

Yangzijiang Financial Holding lost S$0.080 or nearly 15 per cent to S$0.465, extending its losses for the third consecutive day since its debut last Thursday (Apr 28). It was the day's second most active with 115 million shares done..

The day's third most active counter was Dyna-Mac Holdings with 96 million shares traded . The stock jumped S$0.025 or 20.3 per cent on news of a S$180 million job win, which brings the company’s net order book to a record high of some S$640 million.

Thai Beverage Public Co fell S$0.010 or 1.5 per cent to S$0.675. DBS views the counter as a "reopening laggard" as Thailand reopens and also expects that it could seek a return of its BeerCo initial public offering.

Wilmar International fell S$0.030 or 0.7 per cent to S$4.41. Last Friday, the agri giant reported an 18 per cent rise in net profit to US$530 million in Q1 from the same period a year ago, owing to a strong showing by the plantation and sugar milling segments.