S'pore bourse rises on Fed's mellow message
RELIEF that the United States central bank is not in a hurry to raise interest rates gave the local stock market a boost.
The Straits Times Index (STI) rose 24.4 points or 0.7 per cent yesterday to end at 3,386.16.
Shares opened higher and were never in danger of falling into the red. Turnover was $1.2 billion with 1.2 billion shares traded.
A surprisingly dovish stance was adopted by the Federal Reserve following its latest monetary policy meeting, in which it acknowledged that growth prospects were not as bright.
It led Fed chairman Janet Yellen to take pains to reiterate that the central bank will not be impatient about raising rates even though it dropped the pledge to be "patient" in its statement.
Giving the dovish camp more reason to rejoice was the downward revision by policy members of the year-end Fed fund rate from 1.125 per cent to 0.625 per cent.
A majority of analysts now expect the Fed to wait until September before the first rate hike is made, later than initial projections for a rise in June.
Most Asian bourses were buoyed by the Fed statement, which keeps monetary conditions loose in the world's largest economy, a critical factor that has enabled the stock market bull run to continue for six years.
Hong Kong jumped 1.5 per cent, Shanghai added 0.1 per cent, Seoul gained 0.5 per cent, but Tokyo lost 0.4 per cent.
Japanese exporters were hit by a stronger yen as the Fed decision put a halt to the surging greenback's rise.
Among the day's top contributors to the STI's gains were Singtel, which added 10 cents to $4.23, OCBC Bank, which rose 13 cents to $10.36, and Hongkong Land, up 18 US cents to US$7.57.
Commodities firm Noble was the most active stock with 66.3 million shares traded as it fell 1.5 cents to 85 cents, its lowest since September 2013. It is bracing itself for a third and final report criticising its accounting methods by Iceberg Research, even as major financial player Prudential and its units raised their stakes in Noble to become substantial investors.
Australian construction and engineering services provider Civmec advanced 3.5 cents to 39 cents, after assuring investors that its business is on track. It added that its recent share price drop was due to a shareholder selling up for personal reasons.
Mechanical engineering and climate control firm CNA Group lost 0.1 cent to 1.9 cents after it announced it would acquire a 10 per cent stake in gold retailer Jilin Gold Group.
Mining company Blumont fell 0.1 cent to 0.9 cent on news that it has proposed a rights issue to issue 2.7 billion new shares to raise some $27.1 million.