Business

Most Asian markets trade lower

Investors await Fed decision amid lingering worries over Middle East tensions

Lacking drivers ahead of the upcoming US Federal Open Market Committee (FOMC) interest rate decision, markets traded sluggishly yesterday.

Despite slipping lower on fresh news that Saudi Arabia's oil output could be restored by the end of the month, oil prices stayed elevated amid worries about tensions in the Middle East, after the US said Iran was most likely behind the attacks on the Saudi oil refineries.

Asian markets mostly traded lower, including those in Japan, Australia, New Zealand, Hong Kong and Singapore. Markets in China and South Korea closed with gains.

In Singapore, the Straits Times Index (STI) lost 0.51 per cent or 16.16 points to 3,166.84. About 905.12 million securities worth $914.04 million changed hands, and losers outnumbered gainers 196 to 166.

Rex International led active counters, as it has for the past two sessions, but retreated with the declining oil prices. It lost 0.5 cent or 5.38 per cent to $0.088, after 60.4 million shares changed hands.

Tee International picked up 0.4 cent or 9.52 per cent to $0.046 on a volume of 54.3 million, while Yangzijiang Shipbuilding lost three cents or 2.78 per cent to $1.05 with 28.2 million shares traded.

ST Engineering was the top gainer among STI counters, improving 1.54 per cent or six cents to $3.96.

The mainboard-listed company announced on Tuesday that its US subsidiary had acquired a company specialising in solutions to reduce satellite interference and improve satellite communications quality.

Units of Mapletree Industrial Trust (MIT) rose by 3 per cent or seven cents to $2.40, on news the trust had priced an upsized $400 million overnight placement of units at $2.265 each to cover the rich end of initial indications.

The mainboard-listed real estate investment trust (Reit) will use about $393.6 million of the proceeds to partially fund its joint purchase of a North American data centre portfolio worth some US$1.37 billion (S$1.9 billion), which the trust said would cost it about $965 million. The remaining $6.4 million of the proceeds will be used to pay placement-related expenses.

In a report on Tuesday, Maybank Kim Eng research analyst Chua Su Tye raised his target price on MIT to $2.50, saying he favours the trust for its growth fundamentals "as DPUs (distributions per unit) are supported by recovering leasing demand in Singapore and a more resilient portfolio given its high-tech asset investments and overseas diversification".

The interest rate decision expected from the FOMC highlights Fed chair Jerome Powell's unenviable position of trying to appease multiple parties including US President Donald Trump, who has called on the Fed to cut rates below zero, analysts said.

Mr Stephen Innes of AxiTrader said the US' robust industrial production data for August and other recent supportive US economic data give the Fed "a perfect opportunity to walk down some of the market's dovish ambitions".

However, Oanda senior market analyst Edward Moya noted the meeting could mark a turning point into more dovish territory, given downside risks that could see members supporting at least one more interest rate cut by end-2019.

"The hawkish members of the committee have voiced their concerns, which could mean they are ready to capitulate in joining the doves," Mr Moya said.

He added the committee may be able to justify a few more rounds of rate-cutting to reduce inversion pressures on the yield curve, and later return to tightening once the economy is on firmer footing.

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