STI up 0.5% on optimism around lower Fed rates

SINGAPORE’S Straits Times Index (STI) rebounded on Thursday (May 16) in tandem with most regional gauges and Wall Street’s overnight rise. The rally was fuelled by a higher possibility that the Federal Reserve would soon lower interest rates after overnight data showed a moderation in US consumer prices in April.

The STI rose 0.5 per cent or 15.57 points to 3,304.99.

DBS Group Research wrote in a note on US economic indicators on Thursday: “Taken together, a decent (consumer price index) reading and a downside surprise in retail sales suggest that conditions are perhaps not quite as ‘Goldilocks’ as the market is trading.

“In any case, there is no firm conclusion to be drawn from this set of data, and market participants are sufficiently satisfied to keep the soft-landing narrative going, buoying risk sentiment in the process.”

Meanwhile, the knee-jerk reaction on Wednesday from the impending deletion of five STI stocks from the MSCI Singapore index presented a buy-the-dip opportunity for Seatrium : 5E2 0%, City Developments Ltd : C09 0%, Jardine Cycle & Carriage : C07 0%, Mapletree Logistics Trust : M44U 0%, and Mapletree Pan Asia Commercial Trust. : N2IU 0%

These stocks were 0.5 to 4.1 per cent higher at market close on Thursday, whereas they had closed between 1.6 and 11.7 per cent lower a day ago.

Shares of Singapore Airlines : C6L 0% closed down 1.2 per cent or S$0.08 at S$6.73, despite the group posting record high earnings of S$2.7 billion for FY2024. “Core net profits likely peaked in FY2024 due to margin erosion,” said DBS Equity Research on Thursday. The research team has a target price of S$6.10 on the stock, with a “hold” recommendation.

Genting Singapore : G13 0% shares were at the bottom of the STI performance tally, after closing 2.2 per cent or S$0.02 lower at S$0.905.

Gainers beat decliners 333 to 289 across the broader market, with nearly 1.4 billion securities transacted at a total value of about S$1.5 billion.