Singapore shares close 1% lower on Thursday

SHARE prices in the Singapore bourse - alongside regional peers - were splashed in red ink on Thursday ahead of the Eid holiday, after the US Federal Reserve hiked rates and spotted a more hawkish tone in projections while rising trade fears and weak Chinese data further spooked sentiment.

The key Straits Times Index extended previous days' losses to finish lower by 35.8 points or 1.1 per cent to at 3,356.73. Week-on-week, it's been harsh with the index losing nearly 80 points or 2.3 per cent. 

Turnover in the local bourse came in at 2.6 billion shares worth S$2.06 billion versus the previous day's 1.48 billion shares worth S$1.21 billion as losers outpaced gainers with 277 counters down and 154 counters up.

Wall Street's three key indices closed lower with the Dow falling nearly 120 points on fears over higher borrowing costs for corporates. On Thursday, benchmarks in Japan, Hong Kong, China, Australia and Malaysia were awash in losses too.

As predicted, the Fed raised its benchmark interest rate by 25 basis points at its monetary policy meeting - its second hike this year. However, based on the Fed's language, the expected dot plot projection now reflects a median consensus of four, not three, hikes for 2018.

"Markets have already been bumpy this year, and additional rate hikes could add to the volatility in the stock market," said Charles Schwab Singapore managing director Greg Baker.

It should be noted however that the members of the Federal Open Market Committee remain divided on the 2018 policy outlook.

"With the sustained growth momentum and the latest inflation uptick, the conclusions really should not be much of a surprise though participants are also likely well aware that amendments could still arrive into the end of the year with the uncertainty that still lurks over geopolitics and more," said IG Markets analyst Pan Jingyi.

Adding to the cautious mood is the European Central Bank meeting later in the day, the outcome of which is unclear.

Further pressure mounted in Asian markets on growing trade concerns as the deadline for US to unveil the list of Chinese goods to be taxed by additional tariffs looms, with the rhetoric from US President Donald Trump on the matter showing no signs of tamping down.