STI breaks 4,900 amid expectations for Fed to hold rates steady
The benchmark index closes at a record high as DBS and OCBC notched gains of at least 1%
[SINGAPORE] The Straits Times Index (STI) broke new ground on Tuesday (Jan 27) and crossed the 4,900 threshold for the first time.
The benchmark index closed at a historic record high of 4,923.02, amid gains made by several of its constituents – the 30 largest and most liquid companies on the Singapore Exchange (SGX).
Two of the three Singapore banks, which collectively form around 50 per cent of the STI by index weight, advanced by more than 1 per cent on Tuesday. DBS rose 1.7 per cent to S$59.27 and OCBC climbed 1.8 per cent to S$21.42, while UOB fell 0.1 per cent to S$38.45.
Other STI constituents among the top-traded SGX stocks included Singtel , which closed 2.9 per cent higher at S$4.59, with some 34.3 million shares changing hands.
Chinese vesselmaker Yangzijiang Shipbuilding finished 0.3 per cent higher at S$3.32, and Wilmar International ended the day up 4.5 per cent at S$3.50.
Among the real estate investment trusts (Reits), CapitaLand Integrated Commercial Trust fell by 0.4 per cent to S$2.35 while Mapletree Industrial Trust climbed 0.5 per cent to S$2.11. Keppel DC Reit dropped 0.5 per cent to S$2.22.
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The gains come ahead of the US Federal Reserve’s two-day meeting this week, when the central bank is expected to hold interest rates steady and halt its rate-cutting cycle. Several Fed officials have suggested that rates are now well-positioned to support employment while keeping downward pressure on inflation, after three consecutive cuts.
The STI, a barometer for the Singapore market, posted steady gains through 2025 and hit consecutive records in the year. As at Tuesday’s close, it had risen 6 per cent in the year to date and close to 30 per cent over the past year.
Further gains could be on the horizon for the blue-chip index, which is forecast to outperform peers and hit 5,400 by the end of 2026, said a UOB Kay Hian (UOBKH) report on Jan 23.
“We think that the Singapore market remains an attractive one for investors, with the STI outperforming its (peers) on a three, five and 10-year basis,” said the report, which highlighted that tailwinds are expected to continue supporting Singapore market outperformance.
These include policy tailwinds for equities, arising from the deployment of the first tranche of Equity Market Development Programme (EQDP) funds and the future deployment of a second tranche of the funds.
Potential revival in the initial public offering market, a broadened mid-cap focus with the launch of the Singapore Next 50 index and an “anaemic Reits recovery” were also cited as tailwinds by UOBKH.
With the Monetary Authority of Singapore’s funds deployed into the market via the EQDP, continued liquidity inflows should support share prices alongside the rest of the Singapore equities market, said CGS International Securities Singapore (CGS SG) analyst Tay Wee Kuang.
He thinks the Singapore market’s rally could extend, given the backdrop of uncertainty across Asean markets, with upcoming elections in Thailand and uncertain economic conditions in Indonesia.
He noted that CGS SG has assigned a “neutral” rating to Singapore banks, amid forecasts that the sector could record muted earnings growth in 2026 due to a lower interest rate environment.
The investment house on Monday maintained its “add” call for OCBC and reiterated its “hold” call for UOB, having on Jan 16 downgraded its call for DBS to “hold” from “add”.
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