Singapore shares fall 0.3% on Fed's mixed rate signals

SINGAPORE stocks fell on Thursday after the US central bank delivered a widely-expected rate cut but provided limited insight on its next course of action for the year.

The Straits Times Index (STI) opened on higher ground but for most part, moved between positive and negative territory before finishing the day at 3,158.80, down 8.04 points or 0.25 per cent. Losers outpaced gainers 193 to 163.

On Wednesday, it lost 0.51 per cent or 16.16 points to 3,166.84.

Trading activity remained muted, with 845.89 million shares worth S$872.93 million changing hands.

The US Federal Reserve cut interest rates overnight by 25 basis points - the second time it has lowered rates this year - but held off on saying another move is probable. With few shifts in language or nuance, market watchers hoping to decipher the Fed's next move were left for wanting clues.

"In the end, we are keeping a keen eye on trade discussions, on recently concerning oil dynamics, on market liquidity, on Brexit, on the pace of slowing employment conditions, and as always, on the inflation readings to work out when the Fed will cut again," said Rick Rieder, BlackRock's chief investment officer of global fixed income.

Edward Moya, a senior market analyst at Oanda, said the Fed could regret its decision to not be more forthright.

"Its lack of conviction in signalling more rate cuts will probably be a policy mistake that is wasting the effectiveness of the first two rate cuts", he said in a note. "The Fed seems set on waiting for a couple of geopolitical risks to rattle the economy before committing to a full-fledged easing cycle."

Without broad trends to drive prices, Thursday's market made it easy to spot the stockpickers' favourites.

Among the most active counters, TEE International closed at S$0.047, up 2.17 per cent or S$0.001, on a turnover of over 40 million shares.

The company's controlling shareholder Phua Chian Kin is looking to sell his 23 per cent stake in the group for a total of S$9 million in cash or S$0.06 per share.

He recently came under the spotlight for allegedly instructing unauthorised transactions totalling S$6.55 million made by TEE International subsidiaries to related parties.

On Thursday, Golden Agri-Resources saw some 27 million shares change hands. It closed at S$0.245, down 3.92 per cent or S$0.010. Indonesia's prolonged drought, part of a mild El Niño, has been hurting the yield at the palm oil company. It posted a second-quarter net loss and recently told analysts that it was lowering its full-year production guidance.

The STI was also dragged lower by all three local banks, with declines led by United Overseas Bank, which fell 0.77 per cent or S$0.20 to S$25.70.

News emerged on Thursday that the bank's UOB Kay Hian brokerage would be acquiring DBS' remisier base, following the latter's move to transfer its retail equity trading under DBS Vickers to the bank by year-end.

DBS shares closed at S$25.00, down 0.12 per cent or S$0.03.