STI rises 0.3% as upbeat mood over cool inflation continues

SINGAPORE shares rallied on Friday (Jul 14) as risk appetite surged with more data showing easing price pressures in the US, fanning hopes that the US Federal Reserve’s tightening trajectory is close to an end.

Adding to the cheer in the local bourse was the release of GDP data for the second quarter indicating that the Singapore economy has avoided a technical recession, albeit narrowly.

The Straits Times Index (STI) advanced 10.17 points or 0.3 per cent to 3,248.63, taking the cue from Wall Street’s upbeat lead overnight. The index put up a stellar showing this week with gains of nearly 110 points or 3.5 per cent.

Key gauges across the Asia-Pacific, from Hong Kong, China, Taiwan and South Korea to Malaysia and Australia, finished higher, while the Nikkei closed lower after posting solid gains earlier in the day.

“Inflation is on the way down and equities have been on the way up – that seems to encapsulate what has transpired in financial markets this week,” remarked KCM Trade’s chief market analyst Tim Waterer in a note.

Data on softening inflation this week has elevated risk appetite on hopes that the terminal interest rate setting is now within “touching distance”, he said. But such hopes beg one important question: “If the (Federal Open Market Committee) is very close to the terminal rate setting, what does this mean for other central banks? If inflation cools at a similar rate across other countries as is happening in the US, maybe other central banks won’t have to raise rates as much as previously thought.”

He added: “Under this scenario, the pace of US dollar depreciation would be limited as interest rate differentials adjust. However, we are not at that point yet, and so we will await how (consumer price index) data appears around the globe over coming months.”

On the home front, some 1.6 billion securities worth S$1 billion were traded. Gainers trounced losers, with 317 counters up and 223 down.

In contrast to the general upbeat mood in the bourse, Hotel Properties Ltd (HPL) fell S$0.10 or 2.6 per cent to S$3.76 on Friday after the company took the market by surprise with an early morning announcement. The company said its co-founder and managing director Ong Beng Seng has been asked by Singapore’s Corrupt Practices Investigation Bureau to provide information on his interactions with Transport Minister S Iswaran, who is currently on a leave of absence. Ong was issued a notice of arrest and has posted bail of S$100,000, said HPL.

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Singapore Exchange (SGX) closed unchanged at S$9.57. RHB Research issued a “neutral” call on the counter with a target price of S$9.90. The house reiterated its weak outlook for SGX’s cash equities business. This followed the disappointing FY2023 market statistics, which indicated that securities daily average value and derivatives daily average volume declined.