STI follows Wall Street's tumble

IN THE BLACK: The Hour Glass reported a 5 per cent rise in net profit for the year ended March 31 to $57.9 million. The stock closed flat at 81 cents.


    May 28, 2015

    STI follows Wall Street's tumble

    THE Singapore market closed lower yesterday, tracking overnight losses on Wall Street, as investors took fright amid increasing expectations that the United States will soon raise its super-low interest rates.

    All three main indices on Wall Street fell more than 1 per cent on Tuesday - a collective tumble that cascaded into losses on most Asian markets yesterday.

    The Straits Times Index lost 35.04 points or 1.01 per cent to 3,424.94.

    Index stocks Hongkong Land, ComfortDelGro and Noble all dropped by 2 per cent.

    Of the 30 STI stocks, 24 ended in the red, with only four finishing higher and two unchanged.

    Still, not every market in Asia headed lower yesterday. Markets in China and Tokyo, which often provide positive leads for Singapore, ended higher.

    US Federal Reserve chairman Janet Yellen indicated last week that the central bank of the world's biggest economy was poised to raise interest rates this year.

    That view was reinforced on Tuesday, when the US durable goods data and figures on home prices in 20 American cities came out stronger than expected, supporting the rate-hike expectations.

    Fed Bank of Cleveland president Loretta Mester had echoed Dr Yellen's comments on Monday, saying the US economy is close to the point where it can support higher rates.

    "The Fed has made it very clear that there will be a rate hike this year. Those who have been clinging on to false hopes that it won't are waking up to the new reality," said a remisier at a Singapore brokerage.

    Higher US rates would mean stronger bond yields and this typically pulls money away from equities.

    And the higher rates would likely push up lending rates in Singapore, possibly crimping bank loans and slowing economic growth here.

    Looking at the STI's technical side, IG market strategist Bernard Aw said the index had been pushed below the 100-day moving average at 3,424 during the trading day, "and a close under this level would suggest the down move can push on".

    Shares of Boustead Projects fell four cents or 4.2 per cent to 91 cents. The industrial real estate solutions firm on Tuesday reported a 31 per cent slump in full year net profit to $24.7 million.

    After the market closed, luxury watch retailer The Hour Glass reported a 5 per cent rise in net profit for the year ended March 31 to $57.9 million, compared with the same period a year ago. The stock had closed flat at 81 cents.