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Singapore shares add 0.3% as Fed chief reaffirms dovish stance

THE local equities market, like most others, has been in a limbo since last Friday's US jobs data exceeded expectations, sending investors second-guessing the extent of rate cuts by the US Federal Reserve.

On Thursday, they were reassured of the Fed's dovishness, which translated to a risk-on session in Asia.

The Straits Times Index (STI) gained 10.03 points or 0.3 per cent to close at 3,350.45 on Thursday.

Following the testimony, which market watchers said signalled a confirmation of a rate cut of at least 25 basis points (bps) in July, other markets in the Asia-Pacific, including Australia, China, Japan, Hong Kong and South Korea, closed higher.

Eli Lee, Bank of Singapore's head of investment strategy, said that after Fed chairman Jerome Powell's testimony on Wednesday, the private bank's baseline scenario is one where the Fed will cut rates by 25 bps in July, with another similar cut likely to follow in September "since a single cut alone would not help the Fed achieve much".

"Historically, insurance rate cuts by the Fed have been around 75 bps in total, so we could expect another in December or later," he added.

Similarly, Schroders chief economist and strategist Keith Wade believes that rate cuts in July and September are on the horizon, with both cuts likely to be "presented as 'insurance' against the downside risks facing the US economy".

In Singapore, trading volume clocked in at 1.42 billion securities, 19 per cent over the daily average in the first six months of 2019. Total turnover came to S$1.22 billion, 5 per cent more than the January-to-June daily average.

Across the broader market, advancers beat decliners 237 to 191.The benchmark index had six of the STI's 30 components closing in the red.

Singtel added S$0.03 or 0.9 per cent at S$3.53 on 28.5 million shares, the most among benchmark index components.

The local banks were mostly higher. DBS Group Holdings gained S$0.21 or 0.8 per cent at S$25.61, United Overseas Bank edged up S$0.03 or 0.1 per cent to S$26.44. OCBC Bank closed flat at S$11.48.

Mr Powell's confirmation of a dovish stance saw real estate investment trusts (Reits), often billed as key beneficiaries of reduced borrowing costs, stage gains though they appear capped on already high valuations after last month's rally.

Among the gainers were CapitaLand Mall Trust (closed S$0.04 or 1.5 per cent higher at S$2.69), Mapletree Industrial Trust (gained S$0.03 or 1.3 per cent to S$2.32) and Keppel Reit (up S$0.01 or 0.8 per cent to S$1.27).

Mainboard-listed Cordlife Group, which closed 16.5 per cent higher on Wednesday on heavy volume, dipped one Singapore cent or 1.7 per cent to close at 59 cents on Thursday. The counter saw a hive of activity on Wednesday, thanks to married trades amounting to 33.8 million shares. 

Early Thursday, it was revealed that Cordlife's substantial shareholders, tycoon Hon Kwok Lung and his wife, Lam Suk Ying, increased their combined stake in the cord blood banker from 21.52 per cent to 28.17 per cent.