What are the 3 factors that steered SG markets in 3Q23?

In 3Q23, the STI generated a 2.1% total return.

The Straits Times Index (STI) outpaced the FTSE ASEAN Extended 60 Index with a total return of 2.1% in 3Q23.

According to the SGX, the increase in Brent crude oil prices, high rates, as well as slower growth outlook contributed to the total returns generated in 3Q23.

“Fueled by the announcement by Saudi Arabia and Russia to extend their voluntary oil production cuts through the end of this year, Brent crude oil gained 27% to US$95/bbl in 3Q23, and has since returned to near US$90/bbl ahead of OPEC's Joint Ministerial Monitoring Committee,” the SGX said.

Singapore’s three most traded energy stocks –  Rex International, Geo Energy Resources and RH Petrogas – averaged 29% in total returns in 3Q23 on the back of the oil price rally in September. 

The US Federal Reserve’s decision to keep rates higher for longer in 2024 also steered the market during the quarter.

“With the firming of the higher for longer rate outlook, 3Q23 saw less ‘FedSpeak fever’ and less day-to-day swings in the forward expectations of FOMCs and the Federal Funds Rate than seen in 2Q23,” the SGX said.

Meanwhile, the slower 2024 global growth also affected the markets in 3Q23.

“Manufacturing is highly sensitive to global growth outlooks, with Singapore’s Industrial Production in contraction since October 2022, in addition to contracting by 6.6% YoY in the first eight months of 2023,” SGX said.

“The iEdge SG Adv Manufacturing Index generated a 0.5% decline in total return in 2023, bringing its 9-month decline in total return to 1.8%,” it added.