STI and global markets decline amid US interest rate uncertainties

Singapore’s Straits Times Index (STI) experienced a 0.7% dip to 3,076.69 on Friday, October 20, 2023, resulting in an overall weekly loss of 3.4%. This drop was echoed in regional markets, including South Korea’s Kospi, Australia’s , Hong Kong’s , Shanghai bourse, and Tokyo’s . The downward trend was driven by uncertainties over US interest rates and geopolitical tensions.

According to Stephen Innes of SPI Asset Management, rising US bond yields and political tensions are pushing investors towards risk aversion. As a result, safe hedges like the Chicago Board Options Exchange’s Vix, oil, and gold are gaining favor among investors.

Wall Street also experienced a drop with key indexes falling between 0.7% and 1%. This was due to mixed signals from Federal Reserve Chair Jerome Powell on interest rates which created a sense of uncertainty in the market.

In the broader market, there were more losers than gainers with 341 stocks declining compared to 256 advancing. Trading volume involved approximately 1.5 billion shares worth $1.1 billion. Stocks that suffered losses included Capitaland Ascendas Reit and local banks DBS, UOB, and OCBC while Keppel (OTC:) Corp saw gains. Seatrium remained unchanged despite a high trading volume with 415.2 million shares changing hands.

The market’s reaction to these developments underscores the sensitivity of global markets to changes in US monetary policy and geopolitical events. Investors will continue to closely watch the Federal Reserve’s signals on interest rates and the evolving geopolitical landscape in the coming weeks.

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