SINGAPORE: Southeast Asian markets ended lower on Thursday, hit by a hawkish Federal Reserve and weak oil prices, while Singapore shares extended their slide to post their lowest close in a week.
The Federal Reserve raised interest rates on Wednesday for the second time in three months, and said it would begin cutting its holdings of bonds and other securities this year.
However, the Fed's decision and confidence in continued US economic growth was overshadowed by surprisingly weak data released earlier in the day.
US consumer prices unexpectedly fell on month in May and the annual increase in core CPI slipped to 1.7 percent, the smallest rise since May 2015, after advancing 1.9 percent in April.
"Markets are reacting to the situation and have priced in the rate hike," said Liu Jinshu, director of research, NRA Capital.
"The tone and projection suggest that one more rate hike is yet to come, and on top of that, we still have the shrinking treasury balance sheet to think about. I think the market is trying to digest this additional information," he added.
Investor sentiment was also dented by oil prices, which fell to six-week lows under pressure from high global inventories and doubts about OPEC's ability to implement production cuts.
Singapore shares posted their lowest close in one week, dragged down by the financial sector.
While Oversea-Chinese Banking Corp ended at a one-week closing low, index heavyweights United Overseas Bank Ltd closed 2.2 percent lower and DBS Group Holdings shed 0.9 percent.
Indonesia shares retreated from their record closing high hit in the previous session to end 0.3 percent lower, with Astra International Tbk PT pulling down the index.
Indonesia's central bank on Thursday left its benchmark interest rate where it has been since October, saying the level is consistent with efforts to maintain stability while pushing for economic growth recovery.
Malaysia ended in negative territory after hitting a two-year high earlier in the session.
Vietnam shares ended flat.
Comments
Comments are closed for this article.