Singapore shares extend decline on interest rate worries; STI down 0.6%

SINGAPORE stocks extended their decline for the fourth day on Thursday (Mar 2), as traders raised expectations of a higher terminal interest rate.

The Straits Times Index (STI) lost 0.6 per cent or 20.18 points to 3,234.90. Losers outnumbered gainers 332 to 223, after 2.7 billion securities worth S$1.3 billion changed hands.

Major indices in the US were under pressure overnight, after the release of the US Institute for Supply Management (ISM) manufacturing Purchasing Managers’ Index (PMI) continued to point to a challenging “disinflation” process, said Yeap Jun Rong, market analyst at IG.

He noted that the prices paid by manufacturers were an upside surprise, by a wide margin. It also marked the first time that prices have reverted to expansionary territory since October 2022.

While Yeap said that it could take more data to confirm the trend, he noted that rate-hike expectations were recalibrated due to the data, resulting in further bets towards a higher terminal rate.

Regional markets were mixed on Thursday. The Hang Seng Index lost 0.9 per cent and the Nikkei 225 Index slid 0.1 per cent. Meanwhile, the Kospi Composite Index gained 0.6 per cent, and the FTSE Bursa Malaysia KLCI Index rose 0.4 per cent.

In Singapore, Sembcorp Marine continued to be the top-traded counter by volume, with 1.3 billion shares worth S$155.4 million changing hands. The counter closed flat at S$0.115.

Jardine Cycle and Carriage was the top gainer on the STI, rising 4 per cent to close at S$30.96.

On Tuesday, the company said that its net profit for the second half of 2022 fell 42 per cent year on year to US$252.3 million. However, its revenue was up 18 per cent to US$11.1 billion, and its board of directors recommended a final dividend of US$0.83 per share, up from US$0.62 per share in 2021.

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Meanwhile, the top decliner on the index was CapitaLand Integrated Commercial Trust , which lost 2.1 per cent to S$1.89.

The trio of local banks ended lower on Thursday. DBS lost 1.3 per cent to S$33.55, OCBC fell 0.8 per cent to S$12.43, while UOB declined 0.9 per cent to S$29.65.

IG’s Yeap noted that two consecutive weeks of aggressive net outflows from institutional investors have brought the STI back towards its previous consolidation base at the 3,230 level.

He said: “Any break lower could open the door to retest the 3,170 level next.”