Apr 26, 2016

    Punters in Asia opt for safety ahead of Fed meet

    ASIAN markets were mauled by bearish sentiment yesterday with Singapore shares recording their biggest fall in almost two months as investors sought shelter ahead of the United States Federal Reserve meeting this week.

    The benchmark Straits Times Index (STI) pared 40.15 points or 1.37 per cent to 2,900.28 with only $746.3 million worth of shares changing hands in a tepid session.

    Singapore was not the only laggard. All key Asian markets also ended in the red, with Shanghai down 0.42 per cent while Hong Kong dropped 0.76 per cent. Tokyo shed 0.76 per cent and Kuala Lumpur was down 0.2 per cent. Sydney was closed for a holiday.

    The declines came ahead of the US Federal Open Market Committee two-day meeting, starting today, followed by tomorrow's Bank of Japan meeting.

    The Fed is expected to hold US rates steady, with a hike to come in June, according to economists polled by Reuters. But central bank meetings are typically met with speculations that prompt investors into taking their money off the market to avoid knee-jerk reactions.

    The sell-off also spilled over to the energy market, where traders took profit on recent gains to send crude oil futures Brent dropping over 1 per cent to below US$45 a barrel yesterday.

    As the downside pressure built up, Sembcorp Marine again took the brunt of the market jitters. It dropped nine cents or 4.89 per cent to $1.75, the top loser among the 27 STI component stocks that ended the day lower.

    Fellow offshore and marine blue chip Keppel Corp was also belted, closing down 15 cents or 2.63 per cent to $5.55.

    SembMarine's plunge came as the firm announced that it has started its arbitration against Sete Brasil, which has filed for bankruptcy protection.

    With its first-quarter results due tomorrow, "the market will likely continue to monitor its cashflows under this difficult operating environment", OCBC analyst Low Pei Han said, maintaining her sell call on the counter.

    Singapore Technologies Engineering pared 15 cents or 4.41 per cent to $3.25. In the property sector, CapitaLand closed down 11 cents or 3.44 per cent at $3.09 while City Developments dropped 26 cents or 2.9 per cent to $8.71.

    OCBC, which will announce first-quarter results on Friday, closed down 11 cents or 1.17 per cent at $9.28.

    Only one STI component stock rose yesterday, with CapitaLand Mall Trust gaining just one cent or 0.48 per cent to $2.09.