Mar 17, 2016

    Jitters as traders await Fed rate clues

    SINGAPORE shares slogged through a quiet session as investors held their breath ahead of possible fresh interest rate clues from the United States Federal Reserve.

    The benchmark Straits Times Index enjoyed a relatively good start but jitters soon set in and the index closed at 2,844.21, up just 4.77 points or 0.17 per cent. Only $678.6 million worth of shares changed hands across the market.

    Elsewhere, Shanghai rose 0.21 per cent and Hong Kong added 0.15 per cent. Tokyo slid 0.83 per cent, a day after the Bank of Japan's decision to hold back on further easing led to money market confusion.

    Overnight, the Dow Jones Industrial Average rose just 0.13 per cent.

    Pundits believe the Fed will keep rates on hold at the end of its March meeting. But as ever with Fed pronouncements, market watchers will look for signals on the US and global growth outlook and the timing of the next rate rise.

    Rate hikes will be unavoidable this year regardless, OCBC economist Barnabas Gan told The Straits Times.

    "We are expecting two hikes this year," he said.

    This means the greenback will strengthen and put pressure on gold prices. Investors seeing bullion as a safe haven should think twice.

    "Given the stock market volatility, there has been a demand for gold. But our view is still bearish, and I'm calling for gold to touch US$1,100 per ounce at the year end," he said. Gold is now about US$1,230.

    On the local bourse, 19 of the 30 STI constituents rose, led by OCBC which closed six cents or 0.67 per cent higher at $8.95.

    DBS Group Holdings was flat at $15.37 while United Overseas Bank gained six cents or 0.32 per cent to $18.82.

    Keppel Corp put on five cents or 0.84 per cent to $5.98, following news of a joint venture for Vietnam projects, while Sembcorp Marine was flat, closing at $1.68.

    In the backdrop, crude oil benchmark Brent stayed below US$39 a barrel.

    Meanwhile, Singtel was one of the top losing blue chips, down two cents or 0.52 per cent to $3.80. Outside the STI, M1 also dropped, losing one cent or 0.39 per cent to $2.58.

    But StarHub went up one cent or 0.3 per cent to $3.38.

    Heated telco-sector competition has recently come under the spotlight after MyRepublic outlined its data plan in its push to become the fourth operator in Singapore.

    CIMB analyst Foong Choong Chen said Singtel, due to its diversified businesses, will be least at risk if a fourth player enters the already-crowded market here.

    Among penny stocks, interest has turned to Ipco International and LionGold - the day's top actives.

    Ipco rose 0.2 cent or 50 per cent to 0.6 cent, on 130.3 million shares traded.

    On Tuesday, the engineering firm reported a $6.4 million quarterly profit, up from $1.6 million a year ago.

    LionGold, one of the three companies at the heart of a penny stock crash in 2013, put on 0.1 cent or 33.33 per cent to 0.4 cent, on 73.9 million shares traded.

    Another of the trio, Blumont, also saw 28.9 million shares changing hands before closing flat at 0.2 cent.