Singapore stocks sink on Thursday after Powell signals higher inflation; STI down 0.7%
[SINGAPORE] Local shares fell for a second consecutive session on Thursday (Jun 19), after US Federal Reserve chair Jerome Powell warned of 'meaningful' inflation ahead, as consumers are expected to face higher prices due to the Trump administration's proposed import tariffs. He also cautioned against placing too much confidence in the current outlook for rate cuts.
The benchmark Straits Times Index (STI) lost 0.7 per cent or 26.63 points to close at 3,894.18.
Across the broader market, decliners outnumbered advancers 315 to 167, with 981.1 million securities worth S$933.2 million changing hands.
The top performer on the Straits Times Index (STI) was Hong Kong-based conglomerate Jardine Matheson Holdings , up 0.9 per cent or US$0.43 at US$46.26.
At the other end of the index was Thai Beverage , the maker of Chang beer. The counter declined 3.2 per cent or S$0.015 to close at S$0.45.
The trio of local banks were in the red. DBS was down 0.7 per cent or S$0.30 at S$43.93, OCBC declined 0.3 per cent or S$0.05 to S$15.99 and UOB closed 0.3 per cent or S$0.12 lower at S$34.71.
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Elsewhere in the region, key indices ended mostly lower on Thursday, after the US Federal Open Market Committee (FOMC) left the benchmark interest rate unchanged at 4.25 to 4.5 per cent, citing a strong labour market and reduced uncertainty in the economic outlook.
Japan's Nikkei 225 fell 1 per cent and the FTSE Bursa Malaysia KLCI declined 0.7 per cent. Australia's ASX 200 slipped 0.1 per cent and Hong Kong's Hang Seng tumbled 2 per cent. South Korea's Kospi bucked the trend, closing 0.2 per cent higher.
Suan Teck Kin, head of research at UOB Global Economics & Markets Research, said the research team is still projecting for three 25-basis-point rate cuts in 2025, to be delivered at the September, October and December FOMC meetings. This would bring the upper bound of the Fed Funds Target Rate (FFTR) to 3.75 per cent by the end of 2025.
He added that the team is also maintaining its forecast for two additional rate cuts in 2026, which would lower the terminal FFTR to 3.25 per cent that year.
'The revised 'dot plot' suggests the Fed will still cut rates two times this year, unchanged from its March outlook, though the June version shows more dispersion among the Fed members, as a result of the elevated uncertainty,' said Suan.
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