STI slips after five-day rally

The Straits Times Index closed marginally lower on Monday, slipping 0.1% to 3,312.16 and halting a five-day advance. On paper, the move seems inconsequential. In context, it lands at a moment of heightened policy sensitivity, with the US Federal Reserve and Bank of Japan both scheduled to meet this week. Allocators aren’t pulling capital—but they are trimming edge positions, a quiet reweighting that signals caution more than conviction.

This wasn’t triggered by domestic catalysts. The pullback traces instead to external rate recalibrations. Global fund managers, especially those benchmarked to large-cap indices, remain tightly tethered to US macro signals. Friday’s unexpectedly strong US payroll data did more than move markets—it reinforced the notion that monetary easing, if it comes at all, won’t be imminent. For lean markets like Singapore, where turnover is thin and sector concentration high, that shift translates quickly into reduced beta exposure.

REITs and industrials bore the brunt of the retracement. These had rallied earlier on expectations of a steeper yield curve unwind. Their underperformance now suggests markets are beginning to price in a prolonged Fed hold—one unaccompanied by any softening rhetoric. Meanwhile, banks and consumer defensives stayed afloat, offering ballast and underscoring that the broader move was tactical, not thematic.

Look at flows, and the picture sharpens. Last week’s mild uptick in foreign investor interest now looks less like a trend and more like a probe. No exodus has occurred, but neither has fresh capital followed. Singapore, still seen as a low-volatility anchor in the region, retains its appeal—but only within the parameters of a tightly risk-managed playbook.

The next inflection depends on what the Fed says, not what it does. Any indication of dovish flexibility could reignite selective buying. Absent that, Singapore’s rate-sensitive sectors may continue to drift. And complicating matters further is the Bank of Japan’s evolving posture on yield curve control—an added layer of ambiguity for regional bond and currency allocators managing cross-market exposure.

This isn’t just a pause. It’s a readjustment of capital posture in the face of persistent policy fog. Singapore remains a strategic hold—but until the macro map clears, expect allocators to prefer precision over participation.