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STI slips on Monday amid signs of smaller US rate cut

THE Singapore stock market started the week on the back foot with the Straits Times Index (STI) down 0.61 per cent, in response to signals of a smaller US interest rate cut later this month.

Markets "will likely trade with a more risk cynical bent this week as the less dovish Fed narrative continues to sink in" said Stephen Innes, managing partner at Vanguard Markets, in a note.

“Over the next two weeks, the European Central Bank and Federal Open Market Committee will make their policy decisions,” Mr Innes added, “but it is the Fed decision and policy guidance that will be most critical for the markets risk on view.”

Equity markets globally were buoyed last week after dovish comments by New York Fed president John Williams hinted at a half-point rate cut this month.

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But the New York Fed later walked back Mr Williams' comments; the Wall Street Journal also reported that the Fed was likely to cut rates by 25 basis points this month, reducing hopes further.

The STI in Singapore fell 0.61 per cent or 20.74 points to 3,357.22, in line with most Asia markets.

Decliners outpaced gainers 258 to 160. A total of 1.2 billion shares worth S$773.86 million changed hands.

The banks slipped on Monday, save for OCBC Bank which closed unchanged at S$11.64. DBS Group Holdings eased 0.23 per cent or six Singapore cents to close at S$26.56, while United Overseas Bank retreated 0.52 per cent or 14 Singapore cents to settle at S$26.80.

Mechanical and electrical engineering firm Libra Group led the top volumes, gaining 11.54 per cent or 0.6 Singapore cent to close at S$0.058 on 48.7 million shares traded.