Singapore shares end flat after Fed raises interest rates

SINGAPORE: Singapore shares reversed earlier losses to end little changed on Thursday Sep 22 bucking the sea of red in the region and overnight on Wall Street after the US Federal Reserve raised interest rates and signalled further hikes ahead.

The Straits Times Index STI finished at 3,263. 07, a 0.04 per cent or 1.28 points, was up 0.04 per cent after having fallen as much as 0.39 per cent in early morning trade. The lossers were 257 to 230, as 1.02 billion securities worth S $1.09 billion changed hands.

The tilt towards risk-off has dominated early market performance, said Selena Ling, OCBC's chief economist and head of treasury research and strategy.

Banking stocks were heavily traded in terms of value.

All three counters trimmed their losses at the end of the trading session with DBS finishing little changed at S $33.52. OCBC lost 0.32 per cent, or S $0.04, to S $12.31, while UOB dropped 0.54 per cent, or S $0.15, to S $27.53.

There was mixed reviews of real estate investment trusts REITS, which are sensitive to interest rate fluctuations and impact on yield spreads and borrowing costs.

Mapletree Logistics Trust and Suntec REIT declined about 0.6 per cent each, while Ascendas REIT increased by 0.36 per cent.

Inflight caterer and ground handler SATS fell 5.13 per cent, or S $0.21, to S $3.88. The company said on Wednesday it was in discussions to acquire air cargo handler Worldwide Flight Services, although no definitive terms or formal legal documentation has been agreed upon.

Most stock bourses in the region traded in the red, with MSCI's broadest index of Asia-Pacific shares outside Japan at its lowest since May 2020.

Japan s benchmark Nikkei 225 index ended down by 0.58 per cent after the Bank of Japan said on Thursday it would maintain its ultra-low interest rate and dovish policy guidance.

South Korea's Kospi index dropped by 0.63 per cent, or 14.9 points, to 2,332, down 0.63 per cent. After falling by 1.62 per cent in early trade, 31 fell as much as 1.62 per cent. The index had its lowest close since Jul 15.

The Hang Seng Index fell by 1.61 per cent, or 296.67 points, to 18,147 in Hong Kong. The Hong Kong Monetary Authority raised its base rate by 75 basis points through the overnight discount window earlier in the day. Hong Kong's monetary policy moves in lock-step with the United States as the city's currency is pegged to the dollar.

Two other central banks in Asia followed suit with rate hikes on Thursday. The Bangko Sentral ng Pilipinas announced a half-a-point hike in its benchmark interest rates, and Bank Indonesia raised its seven-day reverse repurchase rate by 25 basis points.

The Philippine stock market was trading 0.63 per cent lower on Thursday afternoon, while Indonesia's benchmark Jakarta Composite Index edged up 0.43 per cent.

The Fed's announcement also sent the US dollar up to a new two-decade high, hitting new records against currencies such as the euro, pound and the yen.

The Singapore dollar dropped as much as 0.23 per cent against the dollar to hit 1.4203 - its lowest since April 2020 - earlier in the trading day. It has since been able to claw back to 1.4174 per US dollar by late afternoon.

As the Fed continues to hike its rates, monetary policy tightening efforts among most Asian central banks should help to limit the extent of depreciation among regional currencies, said Mr Tai Hui, chief market strategist for Asia Pacific at JP Morgan Asset Management.