The Singapore stock market experienced a significant boost on Thursday, September 19, following the US Federal Reserve’s announcement of a 50-basis-point reduction in the federal funds rate. The Straits Times Index (SGX: ^STI) reached its highest level in 17 years, climbing 1.1% to 3,633.18.
Key local banks, DBS (SGX: D05), United Overseas Bank (SGX: U11), and OCBC (SGX: O39), all closed the week on a strong note. DBS reached a 52-week high of $39, while UOB and OCBC saw gains of 1.82% and 1.38%, respectively.
With lower interest rates, REITs are expected to benefit from reduced financing costs. REITs with commercial and office properties in the U.S.. saw a surge on Thursday following the Fed’s rate cut. Units of Manulife US REIT (SGX: BTOU) climbed 7.3%, while Keppel Pacific Oak US REIT (SGX: CMOU) and Digital Core REIT (SGX: DCRU) gained 3.8% and 3.3%, respectively.
While the Hang Seng Index in Hong Kong continues to lag behind the STI, it experienced a notable rally last week, driven by optimism about a potential soft landing for the US economy. The Hang Seng Index gained 5.2% during the week, marking its best performance since April.
CSPC Pharmaceutical Group Ltd (HKG: 1093), a notable gainer, surged 9.67% after announcing a share repurchase plan. Alibaba Group Holding Ltd (HKG: 9988) also added 4.12% to its value.
In the US, the S&P 500 and other major stock indices initially rallied in response to the larger-than-expected rate cut, reaching new record highs. Both the Dow Jones Industrial Average (INDEXDJX: ^DJI) and S&P 500 Index (INDEXSP: ^INX) hit fresh all-time highs last Friday. The Dow is up 11.4% year-to-date, closing above 42,000 for the first time, while the bellwether S&P 500 Index has surged more than 20% year-to-date.
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Disclosure: Joanna Sng owns shares of DBS, OCBC, UOB, and Alibaba.
