Image Credits: The Straits Times
On August 16, Singapore’s stock market experienced a notable upswing, with the Straits Times Index (STI) rising 1.1% to 3,352.89. This increase of 37.16 points reflected a broader regional rally driven by diminishing recession fears in the United States and renewed optimism surrounding interest rates.
The STI’s performance was marked by a strong advance in market sentiment, mirrored by gains across Asian markets. Japan’s Nikkei 225 led the charge with a substantial 3.6% increase, while South Korea’s Kospi and Hong Kong’s Hang Seng rose by 2% and 1.9%, respectively. The Australian market also showed significant strength, climbing 1.3% to reach a two-week high, culminating in a 2.5% gain for the week. This surge came on the heels of positive developments on Wall Street, where favorable economic data helped to alleviate recession concerns that had previously weighed heavily on markets.
RHB’s acting group chief economist and head of market research, Barnabas Gan, suggested that earlier recession fears were “clearly overstated.” He noted that market expectations for interest rate cuts had been adjusted downwards—from a forecasted 100 to 125 basis points cut in August to a more modest 75 to 100 basis points by the end of 2024. Gan highlighted a trend of inaccurate market swap pricing throughout the year, emphasizing that initial predictions for multiple rate cuts had not materialized.
Gan also pointed to a “strong bias” toward a potential rate cut in September, driven by a quicker normalization of U.S. jobs data. This anticipated policy adjustment is contributing to the overall positive market sentiment.
Among the top performers on the STI, Mapletree Pan Asia Commercial Trust and CapitaLand Investment stood out, each recording a 2.4% increase in share price. Local banks also saw gains, with DBS Bank climbing 2.3% to $35.56, OCBC Bank advancing 2.1% to $14.31, and UOB rising 1.3% to $30.43.
Conversely, Singtel lagged behind, declining by 1.3% to $2.98, placing it at the bottom of the STI leaderboard for the day.
The positive market developments in Singapore are reflective of broader regional trends and underscore a rebound in investor confidence, buoyed by supportive economic data and shifting expectations for monetary policy.