Stocks, REITs & Gold Rally Ahead of Fed Meeting: Weekly Recap

At our gold seminar this week, one of our community members stopped me with a great question just as I was wrapping up.

She asked, “While we’ve spent the past hour discussing gold, should we be looking at other asset classes like REITs instead, with interest rates expected to be cut next week?”

It’s a timely question, as all eyes are now on the US Federal Reserve’s upcoming meeting, where a rate cut seems almost certain. The real debate is whether the Fed will lower rates by 0.25% or 0.5%. 

With this in mind, it’s no surprise that the cut-off yield for the latest 6-month Singapore T-bill dropped even further to 3.1% in the most recent auction.

For those considering Singapore REITs as potential beneficiaries of the rate cuts, we share more about an exchange-traded fund (ETF) that offers a simple way to access a diversified portfolio of Singapore REITs.

Meanwhile, the Straits Times Index (STI) hit a new 6-year high this week. Singapore’s market is known for its attractive dividend yields, and we’re highlighting three Singapore blue-chip stocks that raised their dividends in their latest results.

As for gold, it reached an all-time high, with spot prices topping US$2,550/oz. For those of you interested in gaining exposure to gold, we’ll be sharing some easy ways to invest in this precious metal.

And to answer the participant’s question directly—I’m sticking with my diversified portfolio. It’s a strategy that keeps my investments resilient, no matter what happens with interest rates.

Happy growing!

Gerald, Founder of Beansprout

⏰ THIS WEEK IN MARKETS

🚀 Best week of the year

What happened? 

The US Consumer Price Index (CPI) rose by 2.5% in August compared to the previous year, moderating from July’s increase of 2.9%.

This also represents the slowest pace of price increases since early 2021, confirming that headline inflation in the US is easing. 

However, core inflation (excluding food and energy) rose by 0.3% in August compared to the previous month, slightly above market expectations. 

What does this mean?

The easing in headline inflation raised investor confidence that the US Federal Reserve will cut interest rates in its upcoming meeting this week. 

In fact, the probability of a 0.50% interest rate cut increased to 50% from 30% a week ago, according to the CME Fedwatch Tool as of 14 September 2024. 

Why should I care? 

The S&P 500 had its best week so far this year, with gains led by tech stocks.

This was further supported by a sharp bounce in NVIDIA’s share price, which was reported to offer a positive outlook on artificial intelligence at an investor conference. 

The Straits Times Index (STI) reached a new six-year high, closing above 3,500 in recent sessions. 

Several REITs continued to post double-digit gains with falling bond yields. Read our REIT Weekly Watch here to get the latest updates on Singapore REITs.  

🚗  Moving this week 

• Digital Core REIT has issued a notice to acquire a further interest of between 0.2% and 40% in the 49.9%-owned Frankfurt data centre. The acquisition cost is estimated at between US$1.1 million to US$213 million. 
• Mapletree Logistics Trust is divesting three assets in Malaysia for RM157.5m at above valuation.   
• Yangzijiang Shipbuilding will take a 34% stake in Tsuneishi Group (Zhoushan) Shipbuilding for RMB833.1m cash, valued at 1x book. The shipyard in Zhejiang Province has two shipbuilding berths and one building dock with a focus on 30,000 to 100,000-ton bulk carriers. 
• SGX August securities daily average volume fell 16% year on year, but daily average value was 28% higher at S$1.37bn. STI constituent stocks accounted for 86% of Aug total trading value.
• Dyna-Mac has received a general offer from major shareholder Hanwha Aerospace and Hanwha Ocean to take it private at S$0.60 per share. The offer will not be extended to the outstanding warrants.

Source: Bloomberg, CNBC, Business Times, Edge Singapore

💡 The big important story

T-bill yield falls to 3.10%. Why the further decline?

The cut-off yield on the latest Singapore T-bill auction on 12 September fell to 3.10% from 3.13%.

🤓 What we're looking out for next week

• Tuesday, 17 Sep: US Retail Sales
• Thursday, 19 Sep: US Federal Reserve meeting

Check out the full list of Singapore stocks, REITs and ETFs with upcoming dividend payments with our dividend calendar.

Source: SGX, Bloomberg, Refinitiv

Join the Beansprout Telegram group and Facebook group for the latest insights on Singapore stocks, REITs, bonds and ETFs.