STI sheds gains on US recession fears, Latest Business News - The New Paper

STI sheds gains on US recession fears

This article is more than 12 months old

Index falls 1.4 per cent to 3,103, joining regional markets, Wall Street in the red

Two sessions into the month and market sentiment is already seesawing.

Yesterday, the local benchmark more than erased the week's gains after investors were jolted by US recession fears.

The impact of protests in Hong Kong, which are becoming increasingly violent, and led to the shooting of a protester on Tuesday, also weighed on sentiment.

Singapore's Straits Times Index (STI) opened 0.4 per cent lower, extending those losses as the session wore on to end at 3,103.45, down 42.58 points or 1.4 per cent.

It was very much the same picture in other Asia-Pacific markets. Australia, Hong Kong, Japan, Malaysia and South Korea all ended in losses.

Markets in China remain closed for the Golden Week celebrations.

"Why the markets are not trading lower is a bit of a mystery given it's tough to debate the fact that the global manufacturing sector is on the cusp of, if not in, a full-blown recession," said AxiTrader Asia Pacific market strategist Stephen Innes.

While the global economic slowdown has been a constant worry this year, the US economy has stayed fairly resilient, but Tuesday's reading suggests the world's largest economy might just be starting to crack.

"The effects were predictable. Wall Street stocks saw a mad scramble for the exit door, US yields fell as did the dollar, and gold pulled itself up from the canvas for a comeback Mohammed Ali would be proud of," remarked Jeffrey Halley, Oanda's Asia Pacific senior market analyst.

Traders are also positioning themselves for further cuts by the US Federal Reserve this month.

As one trader put it: "This might be a sign that more than just insurance cuts are needed."

The dollar struggled to bounce back following a worse-than-expected reading on US factory activity that revived worries about the impact of the trade war on the global economy.

While liquidity was expected to be weak with Chinese markets shut, the dismal US factory activity data release saw traders switching and exiting positions.

Trading volume came in at 917.35 million securities, 77 per cent of the daily average in the first eight months of 2019.

Total turnover was $1.04 billion, 97 per cent of the January-to-August daily average.

Across the market, decliners trumped advancers 277 to 118. All but three of the blue-chip index's 30 counters ended in the red.

On 84.6 million shares traded, Yangzijiang Shipbuilding was the STI's most active counter for the second successive session. Its shares fell six cents or 6 per cent to $0.94.

The banking trio were among the benchmark's main laggards.

DBS Group Holdings dropped $0.47 or 1.9 per cent at $24.77, OCBC Bank fell $0.22 or 2 per cent to $10.77, and United Overseas Bank finished at $25.48, shedding $0.42 or 1.6 per cent.

Sembcorp Industries, which yesterday announced that it has signed an agreement to sell a commercial construction business to Chip Eng Seng Corp's unit for about $49.9 million, fell seven cents or 3.3 per cent to $2.06.

But there were some bright spots.

Lendlease Global Commercial Reit, had a strong debut on the Singapore Exchange's mainboard. Its units opened at $0.935, up from the initial public offering (IPO) price of $0.88.

The Reit closed at $0.92, four cents or 4.5 per cent higher than the IPO price on 74.6 million units traded.

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