Singapore, Malaysia shares rise to 19-month highs as Fed retains outlook
SINGAPORE (NewsRise) - Shares in Singapore and Malaysia jumped to over 19-month highs after the Federal Reserve maintained its outlook on monetary policy tightening through 2018, even as it raised the interest rate as widely-expected.
Singapore's FTSE Straits Times index rose 0.8% to 3,163.52 and the FTSE Bursa Malaysia KLCI added 1.2% to 1737.14. Both closed at their highest level since August 2015.
U.S. equities rose overnight after the Fed increased rates by 25 basis points, and retained its projection for further tightening this year and the next. In its December monetary policy review, the Fed had indicated at two more rate increases in 2017 and three in 2018. Some investors were concerned that the central bank would sound a more hawkish tone, especially after several policymakers this month cautioned against waiting too long before normalizing policy. The U.S. dollar and Treasury yields fell after the Fed's announcement.
"To match expectations and push the dollar and Treasury yields higher, we were going to need to see an increase in the dot plot projections and the median projected path for the U.S. Fed funds rate to four hikes for 2017 and 2018. That certainly didn't happen," said Chris Weston, chief market strategist at IG.
Singapore's currency rose 0.6% to 1.4038 against the dollar Thursday, a two-week high, while the Malaysian ringgit added 0.3% to 4.4350 to the dollar to touch over one-month highs.
Risk sentiment received a further boost after Dutch Prime Minister Mark Rutte won Wednesday's election, defeating Geert Wilders, who had pledged to take the Netherlands out of the European Union if we won. The Nikkei Asia300 Index rose 1.6% to 1,158.40.
"The general buoyancy was enhanced by polls in the Netherlands that suggest populism is not as popular with voters as economists feared," said Michael McCarthy, chief market strategist at CMC Markets.
Singapore's realtors rose following the decline in U.S bond yields. City Developments added 2.6% to S$3.73 and CapitaLand and UOL Group advanced 2.2% each. Among real estate investment trusts, Ascendas Real Estate Investment Trust added 1.2% and CapitaLand Commercial Trust rose 0.3%.
Rig builders gained after U.S. crude prices rose for the first time in eight sessions on Wednesday. Keppel Corp. and Sembcorp Marine rose 3.5% each.
Banks, which have rallied in recent months on hopes that rising interest rates will help margins, underperformed the broader index. DBS Group Holdings was little changed at S$19.12 and Oversea-Chinese Banking Corp. slipped 0.2% to S$9.63.
Singapore Airlines rose 0.4% S$9.97. It said late yesterday that the airlines' passenger carriage, measured in revenue passenger kilometers, increased by 4.1% last month.
Sentiment for the oil-exporting nation's assets was also supported by the overnight rebound in crude prices.
SapuraKencana Petroleum jumped 4.4% to 1.88 ringgit and UMW Oil & Gas added 3.2%.
--Nimesh Vora and Kevin Lim