Singapore, Asia markets react to BOJ rate hike; STI rises 0.4%

SINGAPORE stocks rose on Wednesday (Jul 31), after the Bank of Japan (BOJ) lifted interest rates for the second time since 2007.

The benchmark Straits Times Index (STI) expanded 0.4 per cent or 14.17 points to 3,455.94.

Across the broader market, advancers beat decliners 363 to 198, as 1.1 billion securities worth S$1.2 billion changed hands.

On Wednesday, Japan’s central bank lifted interest rates to 0.25 per cent, from a range of zero to 0.1 per cent.

Stefan Angrick, senior economist at Moody’s Analytics, said the BOJ’s rate hike “sits uncomfortably with the poor run of economic data and lack of demand-driven inflation”.

“With markets now firmly pricing in a rate cut by the US Federal Reserve in September, the BOJ may have concluded that the window for rate hikes is closing faster than expected, prompting action now,” he said. “But it doesn’t change the fact that the central bank is hiking into a weak economy.”

Key regional indices were in the black after the news. Hong Kong’s Hang Seng Index jumped 2 per cent, South Korea’s Kospi Composite Index climbed 1.2 per cent and Japan’s Nikkei 225 increased 1.5 per cent. The Bursa Malaysia Kuala Lumpur Composite Index ended 0.9 per cent higher.

Back home, the top performer on the STI was offshore and marine player Seatrium , which was up 4.3 per cent or S$0.07 at S$1.68.

At the bottom of the index was Mapletree Logistics Trust . The real estate investment trust’s units declined 1.5 per cent or S$0.02 to S$1.29.

SEE ALSO

Asia: Yen rises ahead of Bank of Japan decision as rate hike talk swirls

Bank of Japan raises interest rates, lays out bond taper plan

The trio of local banks ended higher on Wednesday. DBS was up 0.1 per cent or S$0.03 at S$36.59, while OCBC climbed 0.3 per cent or S$0.05 to S$14.85.

UOB , which is slated to release its second-quarter results on Thursday, ended 0.3 per cent or S$0.09 higher at S$32.35.