WITH the conclusion of the two-day US Federal Reserve meeting for June, investors got confirmation of what they were expecting - the door for rate cuts in the following months was open. This sent equity markets higher.
"Markets are now pricing in a very high probability that the Fed will cut rates at their next meeting on July 31, with a good chance that it will be a 50 basis point cut rather than a 25 basis point cut. Powell lent support to the idea that starting with a larger cut might be appropriate under current circumstances," said UBS Global Wealth Management's regional chief investment officer Kelvin Tay.
Financials continued to trend upwards. DBS Group Holdings closed S$0.39 or 1.5 per cent up at S$25.82, OCBC Bank added S$0.06 or 0.5 per cent at S$11.24 while United Overseas Bank finished at S$26.22, advancing S$0.08 or 0.3 per cent. CGS-CIMB analysts are of the view that the three local banks have "steady asset quality metrics and robust capital levels to provide some baseline support for the sector at current valuations". CGS-CIMB remains neutral on the local banking sector but favours UOB over OCBC and DBS.
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