Soft landing bets for US economy lift investor sentiment; STI up 0.1%
Across the broader market, gainers beat losers 288 to 266, with 920.2m securities worth S$1.1b changing hands
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SINGAPORE shares rose on Monday (Aug 19), amid expectations of a soft landing for the US economy, after Federal Reserve members flagged the possibility of easing monetary policy over the weekend.
The benchmark Straits Times Index (STI) rose 0.1 per cent or 2.67 points to 3,355.56. Across the broader market, gainers beat losers 288 to 266, with 920.2 million securities worth S$1.1 billion traded.
As US inflation continues to ease favourably, markets have gained confidence in a September rate cut. Minutes due on Wednesday for the last policy meeting should underscore the dovish outlook, ahead of Fed chairman Jerome Powell’s speech on Friday.
Regional markets were broadly in the black. The Shanghai Stock Exchange Composite Index gained 0.5 per cent. Hong Kong’s Hang Seng Index rose 0.8 per cent, while Japan’s Nikkei 225 declined 1.8 per cent.
In a note on Monday, Eli Lee, chief investment strategist of Bank of Singapore, highlighted that history suggests further equity upside after the first Fed rate cut if the markets see a soft-landing outcome.
“Although we believe that US growth could hit a soft path in H2 2024 due to the waning effects of fiscal stimulus and declining post-pandemic cash savings, our base case is that the US economy remains relatively resilient, and that the Fed will cut rates in time to avert a recession,” he said, noting that the world’s largest economy posted a 2.8 per cent GDP figure for Q2, stronger than street estimates.
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STI constituent Hongkong Land led the gain, up 3.2 per cent or US$0.11 to US$3.58.
Meanwhile, Yangzijiang Shipbuilding was at the bottom of the table, closing Monday down 2.3 per cent or S$0.06 to S$2.51.
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