STI pulls back as Fed ponders tightening

THE Straits Times Index on Tuesday took its cue from movements in the Dow futures and the Hong Kong market, dropping 15.9 points to 3,225.95. Having already risen sharply on Monday ahead of Wall Street's record high later that day, trading was much more subdued on Tuesday, with turnover amounting to 1.6 billion units worth S$1.04 billion and the broad market recording 184 rises versus 227 falls excluding warrants.

One explanation offered for the quiet session was caution ahead of this week's US Federal Open Market Committee meeting. Although no interest rate hike is expected after the meeting ends on Wednesday, the Fed is expected to announce plans to unwind its US$4.2 trillion balance sheet that had to be expanded to that size because of the sub-prime crisis in 2008.

The index was dragged lower by the banks, Jardine stocks and Singtel. However, also weighing down the index was ComfortDelGro, which has recently come under pressure for a variety of reasons, including the increased competition it faces in the taxi sector. On Tuesday, it dropped S$0.06 to S$2.01 on volume of 20.6 million.