Singapore shares reverse losses, bucking falls in Asia after US Fed delivers another big rate hike

SINGAPORE: On Thursday (Sept. 22), Singapore stocks reversed previous losses to close unchanged, reversing a sea of ​​red in the region and overnight on Wall Street after the U.S. Federal Reserve raised interest rates and reported further increases to come.

The Straits Times Index (STI) closed at 3,263.07, up 0.04% or 1.28 points, after falling 0.39% in morning trading. Losers outnumbered winners from 257 to 230 as 1.02 billion shares worth S $ 1.09 billion changed hands.

“Risk appetite dominated early market performance,” said Selena Ling, OCBC chief economist and head of treasury research and strategy.

Bank stocks were among the most traded stocks of the day in terms of value.

All three counters cut their losses towards the end of the trading session, with DBS closing short changed to 33.52 Singapore dollars. OCBC fell 0.32%, or S $ 0.04, to S $ 12.31, while UOB fell 0.54%, or S $ 0.15, to S $ 27.53.

Real estate investment funds (REITS), which are sensitive to changes in interest rates due to the impact on yield spreads and borrowing costs, were mixed.

Mapletree Logistics Trust and Suntec REIT were down about 0.6% each, while Ascendas REIT was up 0.36%.

In-flight food service provider and SATS ground handling service fell 5.13%, or S $ 0.21, to S $ 3.88. The company said Wednesday it was in talks to acquire the Worldwide Flight Services air cargo handler, although no definitive terms or formal legal documentation had been agreed.

In the region, most exchanges were trading in the red, with the broader MSCI index of Asia Pacific equities outside of Japan at a low since May 2020.

Japan’s Nikkei 225 benchmark closed 0.58% lower after the Bank of Japan said Thursday that it will maintain its extremely low interest rate and accommodative policy guidance.

South Korea’s Kospi Index closed down 0.63%, or 14.9 points, at 2,332.31, after falling 1.62% in early trading. The index marked its lowest close since July 15th.

In Hong Kong, the Hang Seng benchmark tumbled 1.61%, or 296.67 points, to 18,147.95. Earlier today, the Hong Kong Monetary Authority raised the base rate applied through the overnight discount window by 75 basis points. Hong Kong’s monetary policy is moving at the same pace as that of the United States, with the city’s currency pegged to the greenback.

Two other Asian central banks raised rates on Thursday: Bangko Sentral ng Pilipinas announced a well-anticipated hike in benchmark interest rates by half a percentage point, and Bank of Indonesia raised its reverse buyback rate to seven by 25 basis points. days points. .

The Philippine stock market was last seen down 0.63% on Thursday afternoon, while the Indonesian benchmark Jakarta Composite was up 0.43%.

Meanwhile, the Fed’s announcement also pushed the US dollar to a new two-decade high, hitting new highs against currencies such as the euro, pound and yen.

The Singapore dollar lost up to 0.23% against the greenback, hitting 1.4203, the lowest since April 2020, at the start of the trading day. It has since recovered to 1.4174 per US dollar in the late afternoon.

A strong dollar is likely to persist as the Fed continues its aggressive rate hikes, but monetary policy tightening efforts by most Asian central banks should help limit the extent of the regional currency depreciation, he said. Tai Hui, chief market strategist for Asia-Pacific. at JP Morgan Asset Management.