STI slips amid signs of smaller US rate cut

The Singapore stock market started the week on the back foot with the Straits Times Index (STI) down 0.61 per cent, in response to signals of a smaller US interest rate cut later this month.

Markets "will likely trade with a more risk cynical bent this week as the less dovish Fed narrative continues to sink in", said Mr Stephen Innes, managing partner at Vanguard Markets in a note.

"Over the next two weeks, the European Central Bank and (the US) Federal Open Market Committee will make their policy decisions."

Mr Innes added: "But it is the Fed decision and policy guidance that will be most critical for the markets' risk-on view."

Equity markets globally were buoyed last week after dovish comments by New York Fed president John Williams hinted at a half-point rate cut this month.

But the New York Fed later walked back Mr Williams' comments. The Wall Street Journal also reported that the Fed was likely to cut rates by 25 basis points this month, reducing hopes further.

The STI in Singapore fell 20.74 points to 3,357.22, in line with most Asia markets.

Decliners outpaced gainers 258 to 160. A total of 1.2 billion shares worth $773.86 million changed hands.

The banks slipped yesterday, save for OCBC Bank which closed unchanged at $11.64. DBS Group Holdings eased 0.23 per cent or six Singapore cents to close at $26.56, while United Overseas Bank retreated 0.52 per cent or 14 cents to settle at $26.80.

Mechanical and electrical engineering firm Libra Group led the top volumes, gaining 11.54 per cent or 0.6 cent to close at $0.058 on 48.7 million shares traded.

Another hot stock was Broadway Industrial, whose share price surged 63.6 per cent amid active trading, triggering a query from the Singapore Exchange.

At 11.34am, Broadway Industrial was up 2.8 cents to 7.2 cents, after some 6.1 million shares changed hands - almost triple its average three-month volume of 2.3 million shares - making it one of the most heavily traded securities on the Singapore bourse.

The precision manufacturer was added to the exchange's watch list on June 6 for failing to meet the minimum trading price criterion.

Mr Eli Lee, head of investment strategy, and Mr Conrad Tan, investment strategist at Bank of Singapore, said: "The current consensus reflects a temporary dip in earnings growth before a recovery in H2 2019 and 2020, and investors will carefully parse management language for potential disappointment, which might inject some near-term volatility into equities and high-yield bond markets following the sharp run-up over the year to date."

This week, half of the real estate investment trusts (Reits) listed on the Singapore bourse will report earnings while a trio of STI components are reporting their earnings for the second quarter of the calendar year.

Mainboard-listed Sinostar PEC on Sunday said it expects to report a net loss for the second quarter ended June 30. Sinostar's shares finished 5.41 per cent or one cent lower at $0.175.

Catalist-listed security solutions provider Secura Group has also said it is expecting to report a net loss for the three months ended June 30. The counter declined 7.94 per cent or 0.5 cent to $0.058.

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