SG Morning Brief｜STI Falls 1.4% Before Fed's First Hike Since 2023

Key Points

• The Straits Times Index closed at 5,638.64 on Tuesday, down 1.39% (79.38 points), with 346 losers against 176 gainers.
• DBS fell 1.17% to S$76.75 as AI-slowdown calls from US tech leaders triggered a broad regional risk-off.
• US stocks fell for a sixth session in seven; the 10-year Treasury yield touched 5.04%, its highest since 2007, as WTI crude jumped 4.4% to US$105.83.
• The Federal Reserve is expected to deliver its first rate hike since 2023 at 2.00am SGT Thursday, with a 25bp move to 4.00% roughly 94% priced in.
• Watch Singapore banks and REITs today, the SGX names most sensitive to the Fed's rate path and the surge in global yields.

Singapore Open

The Straits Times Index fell 1.39% (79.38 points) to 5,638.64 on Tuesday, as calls from top US AI executives and chipmakers to slow the pace of artificial-intelligence development rattled regional sentiment. Losers outnumbered gainers 346 to 176, with about 1.1 billion securities worth S$1.8 billion changing hands.

$DBS (D05.SG)$ led the lenders lower, closing down 1.17% at S$76.75, with $OCBC (O39.SG)$ and $UOB (U11.SG)$ also in the red as elevated US Treasury yields weighed on rate-sensitive financials. DBS separately said it would vigorously resist a S$1.3 billion 1MDB-linked claim.

$Singtel (Z74.SG)$ is another name to watch: analysts told The Business Times the latest Optus network outage, less severe than last September's 13-hour disruption but still affecting some emergency calls, could force the telco to accept a lower price for the minority stake it is seeking to sell in the Australian unit.

Singapore Macro

The Monetary Authority of Singapore steers policy through the Singapore-dollar nominal effective exchange rate (S$NEER), not an interest rate. In April 2026, MAS slightly steepened the currency's appreciation slope to cap imported inflation, and it projects 2026 core inflation of 1.0%-2.0%.

That framework matters today. With WTI crude back above US$105, a Fed hike plus a firmer US dollar transmits through two channels: higher USD funding costs push up local rates, while imported energy inflation keeps MAS biased toward a stronger SGD. For SGX investors the split cuts both ways, with banks getting net-interest-margin support while REITs and other high-yield plays face repricing risk on financing costs.

US Overnight

Wall Street fell for a sixth time in seven sessions on Tuesday. The Dow lost 328.09 points (0.63%) to 52,093.11, the S&P 500 dropped 0.45% to 7,585.73, and the Nasdaq Composite slid 0.78% to 25,981.57. The 10-year Treasury yield closed near 4.995% after touching 5.04%, its highest since 2007, while energy was the only S&P 500 sector to advance, up 2.3%.

The catalyst was oil: the closure of a key Saudi crude pipeline stoked supply fears, sending Brent up 2.9% to US$108.75 and WTI up 4.4% to US$105.83. Markets now price a 94% chance of a 25 basis-point hike on Wednesday, up from 59% a week ago.

Key Movers

$Dave & Buster's (PLAY.US)$ -19% - the entertainment chain tumbled after a second-quarter revenue miss, the clearest single-stock casualty of the risk-off tape.

$Coinbase (COIN.US)$ and crypto proxies fell - Bitcoin slid about 5.8% to around US$76,000 after the US Senate declined to advance the Digital Asset Market Clarity Act, dragging listed crypto names lower.

$Amazon (AMZN.US)$ -1.83% to US$248.89 - higher rates raise the financing cost of the company's capital-intensive cloud and AI build-out, and AWS flagged continued service disruptions in Bahrain and the UAE. $Nvidia (NVDA.US)$ bucked the trend, edging higher even as Alphabet slipped.

Asia Pre-Market

US equity futures pointed modestly lower in early Asian trade, with S&P 500 futures down about 0.3% and Nasdaq 100 futures off about 0.3%, as traders squared positions ahead of the Fed. WTI held near US$105.83, spot gold eased to around US$4,262 an ounce, and Bitcoin traded near US$76,000 after its post-vote drop.

The key timing note: the Fed decision lands at 2.00am SGT Thursday, so SGX trades a full session today without knowing the result. Expect cautious, low-conviction trade, with banks and REITs most sensitive to the yield signal.

Today's US Earnings and Economic Calendar

It is a light week for mega-cap earnings. Lennar is the only noteworthy name on today's tape.

Earnings Spotlight: Lennar. The US homebuilder reports fiscal Q3 after Wednesday's close, with consensus at US$1.31 a share on about US$8.4 billion in revenue, down roughly 35% year over year as elevated mortgage rates keep pressuring US housing. The report lands right after the Fed decision, so watch management's comments on orders and gross margin for a read on how much further rates could bite.

One More Thing

The tradeable question today is not whether the Fed hikes, a 25bp move is roughly 94% priced, but what the new dot plot implies next. One hike would likely be a relief; a signal of a second hike would pressure rate-sensitive SGX names further. For Singapore portfolios the framework is simple: separate sector rotation (energy up, AI hardware down) from outright de-risking. If oil keeps climbing, MAS's inflation bias keeps the SGD firm and bank margins supported, while REITs absorb the repricing. If the Fed signals more to come, treat rate-sensitive positions as vulnerable until the 2.30am press conference is done.

Sources: The Business Times, The Straits Times, The Wall Street Journal.

This briefing is for informational purposes only and does not constitute investment advice.