Aug 30, 2016

    Monday blues after Yellen's stronger hint of a rate hike

    SINGAPORE equities began the week on a dull note after United States Federal Reserve chair Janet Yellen last week signalled that the case for a rate hike has grown stronger.

    The benchmark Straits Times Index (STI) slid 28.22 points, or 0.99 per cent, to 2,829.4.

    Last week's headline numbers on Singapore's industrial production last month, which came in much worse than expectations - down 3.6 per cent on the year - also put a dent on sentiment.

    Markets elsewhere in Asia also dropped. Hong Kong lost 0.39 per cent, Shanghai pared 0.01 per cent and Sydney fell 0.84 per cent.

    Tokyo bucked the trend, jumping 2.3 per cent on a weaker yen.

    Wall Street eased 0.29 per cent on Friday following a volatile session.

    Traders are now pricing in the possibility of a rate hike in September though Mrs Yellen did not commit to an exact timing in her speech.

    Much will depend on the US non-farm payroll data released at the end of this week, said Richard Jerram, chief economist at Bank of Singapore.

    "A soft number would be no surprise after two unusually strong months, which would put pay to the chance of a move in September," he added in a note, although he noted that a move in December is more likely, followed by two or three hikes next year.

    Of the 30 STI constituents, only two clocked gains - Sats, which rose eight cents or 1.7 per cent to $4.90, and SIA Engineering, up one cent or 0.3 per cent to $3.86.

    A total of 25 blue chips fell into the red while three were flat.

    Casino operator Genting Singapore was among the biggest losers, falling two cents or 2.6 per cent to 73.5 cents, along with telco SingTel, which lost 10 cents or 2.4 per cent to $4.12.

    All three local banks finished lower, with DBS Group Holdings retreating seven cents or 0.5 per cent to $15.03. OCBC Bank dropped four cents or 0.5 per cent to $8.58, and United Overseas Bank slipped five cents or 0.3 per cent to $18.

    Oil and gas-related plays also fared poorly as crude prices took a hit in the wake of Mrs Yellen's comments. Conglomerate Keppel Corporation fell 10 cents or 1.9 per cent to $5.27.

    Sembcorp Marine shed 1.5 cents or 1.1 per cent to $1.30.

    Noble Group took the spot as the day's top traded, falling half a cent or 3.9 per cent to 12.4 cents on 57.5 million shares done.

    Turnover across the bourse was thin, with just 719.2 million shares worth $733.8 million changing hands.