Asian markets ease on Powell’s comments

With the US Federal Reserve's rate cut of 25 basis points announced following its July meeting, markets got what they expected.

After all, markets globally have, in the two months leading up to Wednesday's meeting, already priced in this rate cut.

But central bank chairman Jerome Powell's leaning-on-hawkish statements led some to cast doubt on the possibility of further rate cuts this year, hitting sentiment and sending Wall Street's three main benchmarks closing at an average of 1.2 per cent lower on Wednesday.

The perceived lack of dovishness from Mr Powell's statements had less of an effect on markets in Asia.

Singapore's Straits Times Index (STI) closed at 3,291.75, down nine points or 0.3 per cent yesterday.

Elsewhere in the Asia-Pacific, shares in Australia, China, Hong Kong and South Korea also closed lower but to a lesser extent than on Wall Street.

Japan and Malaysia bucked the trend, ending the day in positive territory.

IG market strategist Pan Jingyi, referring to the Fed's move, read it as a repeat of last week's European Central Bank meeting, where the communique was also less dovish than expected.

While much attention was on Mr Powell's hawkish tilt, Asian markets also had to contend with the US-China trade talks in Shanghai ending early and the worries over economic growth, which have hit the region more than the US.

In Singapore, trading volume clocked in at 934.31 million securities, 78 per cent of the daily average in the first six months of 2019.

Total turnover was $1.11 billion, 5 per cent over the January-to-June daily average.

Across the broader market, decliners beat advancers 264 to 162, and the blue-chip index had 18 of its 30 components closing in the red.

Singtel, which rose $0.03 or 0.9 per cent to $3.36, was the benchmark index's most traded stock, with 20.4 million shares changing hands.

Fellow telecommunications sector plays also closed higher. StarHub was up $0.01 or 0.7 per cent to $1.52 and NetLink NBN Trust rose $0.01 or 1.2 per cent to $0.875.

Financials had a mixed day at the office.

DBS Group Holdings ended $0.10 or 0.4 per cent higher at $26.51.

OCBC Bank fell $0.12 or 1.0 per cent lower at $11.42, and United Overseas Bank closed at $26.28, down $0.12 or 0.5 per cent.

Both banks will report their second-quarter earnings before the market opens today.

Bourse operator Singapore Exchange (SGX), which on Wednesday posted a 24 per cent increase in its bottomline for the fourth quarter on record derivatives revenue, saw its shares finish $0.14 or 1.8 per cent lower at $7.78.

DBS Equity Research upgraded its recommendation on SGX to "Buy", with a target price of $8.30 on the back of strong earnings.

The bank's analyst Lim Rui Wen said: "We believe SGX will continue to benefit from strong demand for risk-management instruments amid the uncertain market environment. It has delivered record derivatives performance in the last few quarters, offsetting the slower equities business."

RHB Research Institute, however, believes the bourse operator's positives, like its stronger derivatives business profile, have largely been priced in.

It has therefore downgraded the stock to "Neutral" with a target price of $8.10.

Singapore Airlines, the other STI component that reported earnings after the market closed on Wednesday, ended $0.47 or 4.9 per cent lower at $9.20 on an ex-dividend basis.

The national carrier's Q1 net profit dropped 20.7 per cent on higher share of losses from associated companies and net finance charges.

For full listings of SGX prices, go to https://www2.sgx.com