Markets cheered by potential Fed pivot

SINGAPORE – Major global equity markets continued rallying into their fourth week, buoyed by expectations that central bank rate hikes are over and 2024 could possibly see a pivot towards easier monetary policy.

This despite concerns in some circles that higher-for-longer interest rates could potentially damage consumer demand (the primary driver of economic growth) and corporate profits (the primary determinant of market valuation), and ultimately drive economic growth lower.

On Wall Street, key indexes capped off Thanksgiving week with their best monthly run in three years. The Dow Jones Industrials’ gain of 1.27 per cent last week took it to its highest levels since July as it closed Nov 24’s session at 35,390.15 points. The marquee Wall Street index is now up 8 per cent in a month.

The S&P 500, which has a much broader spectrum of stocks, gained 1.13 per cent to 4,559.34 points, taking its monthly gain to over 10 per cent. Some analysts expect this broad-based index to hit 5,000 by the first quarter of 2024. Meanwhile, the tech-heavy Nasdaq notched up a 1 per cent gain to 14,250.85, adding up to a monthly rise of 13 per cent.

But in Singapore, the market remained in a moribund state, with the Straits Times Index remaining range bound and ending the week down 0.9 per cent to 3,094.81 points. As I’ve pointed out in my columns before, the local bourse seems to be stuck in a cycle of low liquidity and pessimism, with investors missing gems in its midst.

Take the case of LHN Group, for example. As I projected, the company announced a generous dividend after a 56 per cent jump in second-half net profit to $21.3 million. Its 2 cents per share payout brought its full-year total dividend to 3 cents per share – translating

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