Wednesday 16 January 2019
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todayonline - 2 month ago

Southeast Asia stocks drop as Fed rate view on track for weekly losses

Southeast Asian stock markets fell on Friday as the U.S. Federal Reserve offered no indication on Thursday that it might slow the pace of its rate increases, wiping doubts on the likelihood of a rate raise in December. The Federal Open Market Committee (FOMC) has raised U.S. interest rates three times this year and is widely expected to do so again next month. According to the CME group s FedWatch tool, the likelihood of the Fed raising rates by another 25 basis points in December is 75 percent. Whenever the U.S. Fed increases their policy rates, there are tendencies for capital to go to safer assets, so emerging markets usually suffer some sell-off, said AP Securities analyst Rachelle Cruz. The sharp retreat across the board on Friday put Southeast Asian stocks on track for weekly losses, with the Philippines lt;.PSI gt; heading for a 2.5 percent slump on the week, while Singapore lt;.STI gt; was set for an about 1.6 percent drop. Whether FOMC was the (de)motivation that derailed the two-day winning streak in equities is perhaps inconc but it is notable that post-elections rally has fumbled, Mizuho said in a note, referring to a rally in global equities after the U.S. midterm election results. Indonesian shares lt;.JKSE gt; dropped 1.5 percent in the session and were set to snap an eight-session winning streak. Consumer goods company Unilever Indonesia lt;UNVR.JK gt; fell as much as 4.3 percent to a two-month low. Singapore stocks fell 1 percent and Thai shares lt;.SETI gt; retreated 0.5 percent, both dragged down by losses in oil and gas companies as oil markets on Friday remained weak because rising supply and concerns of an economic slowdown pressured prices, with U.S. crude now down by 20 percent since early October. Thailand s PTT PCL lt;PTT.BK gt; fell 1.5 percent in the session, while Singapore s Keppel Corp lt;KPLM.SI gt; shed nearly 2 percent. Philippine shares fell as much as 1.2 percent, weighed down by losses in industrials. DMCI Holdings Inc lt;DMC.PS gt; fell more than 1 percent to its lowest since Oct. 31, while JG Summit Holdings lt;JGS.PS gt; dropped 4 percent to its lowest in three weeks. REUTERS

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