STI sheds 1.2% on Thursday as US Fed hike spooks markets

SINGAPORE shares tumbled on Thursday (Nov 3) alongside a sea of red across the regional markets, following overnight losses in Wall Street amid some confusion – and disappointment – over the messaging from the US Federal Reserve on the speed and extent of the monetary tightening path.

The key Straits Times Index fell 1.2 per cent or 38.62 points to close at 3,102.51 points. Key gauges across the region posted losses with the sharpest falls in Hong Kong, Malaysia and Australia. Japan was closed on Thursday for a holiday.

As widely expected, the Federal Reserve raised the Fed Funds target rate by 75 basis points to 3.75 to 4 per cent at its monetary policy meeting. This marks the Fed’s fourth successive supersized hike. 

The losses in equity markets indicate that Fed Chair Jerome Powell did not offer the passage to the downshift (in rate hikes) that investors were pining for, and now puts the onus for any market rebound squarely on next week’s US Consumer Price Index (CPI) print, said Stephen Innes of SPI Asset Management.

He added: “Until inflation improves substantially, the US interest rate glide path is higher for longer... Investors’ ability to absorb another backup in rates, and the power of corporates to adjust to a higher for longer cost of the capital environment, remains a crucial question for risk markets.”

Overnight on Wall Street, the Dow Jones Industrial Average dropped 1.6 per cent and the S&P 500 shed 2.5 per cent, while the Nasdaq Composite tumbled 3.4 per cent.

On the local bourse, some 1.3 billion securities worth S$1.02 billion were traded. Losers outpaced gainers, with 313 counters down and 190 up.

The losses were led by the trio of local lenders, with DBS, UOB and OCBC finishing 1.6 per cent, 0.2 per cent and 0.9 per cent lower, respectively.

Singapore Post reported a record half-year revenue of S$958.9 million, but incurred a net loss of S$9.9 million for the six months ended September, owing to higher operating expenses and a higher put option redemption liability on its Australian subsidiary. Shares of SingPost finished 1.8 per cent or S$0.01 lower at S$0.54 on Thursday.

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Singapore shares extend Wall Street losses at Thursday’s open; STI down 0.7%

SIA Engineering recently reported a group net profit of nearly S$20 million for its second quarter ended September – up 88 per cent – on the back of a 38 per cent jump in revenue to S$191 million from a year ago.

CGS-CIMB Research reiterated its “add” rating on the stock and raised its target price to S$2.44 from S$2.42, on the back of a promising pace of recovery. China’s reopening and quicker improvements in labour shortages are potential re-rating catalysts, the house added. SIA Engineering shares closed 1.8 per cent or S$0.04 higher at S$2.21.