[SINGAPORE] The Straits Times Index (STI) declined by over 1 per cent on Thursday morning amid declining investor sentiment, as US markets wobble due to inflation fears and a hawkish Fed chair.

The benchmark index fell to an intra-day low of 5,638.94 points. It later rebounded to 5,669.6 as at 9.37 am, still down 43.59 points or 0.8 per cent. Across the broader market, losers outweighed gainers 193 to 171, after 190.8 million securities worth S$402.6 million were transacted.

Local banks were a sea of red in the morning. DBS ticked down 0.8 per cent to land at S$74.42, while UOB was 0.8 per cent lower at S$43.52. OCBC fell 2.1 per cent to reach S$29.15.

AEM Holdings and UMS dropped significantly in early trade, too, down 6.3 per cent and 3.2 per cent respectively.

US Fed chair Kevin Warsh kept rates unchanged in the 3.5 per cent to 3.75 per cent range, which markets interpreted as his renewed emphasis on price stability and rejection of any implicit inflation target above 2 per cent as a more hawkish signal.

James Ooi, market strategist at Tiger Brokers, said the retreat from providing forward guidance gives the Fed greater policy flexibility, but also leaves investors with less clarity on the policy path ahead.

“That uncertainty could translate into higher market volatility, and expectations of a September rate hike implied by futures markets should be viewed more as a reflection of investor sentiment rather than a definitive forecast of how FOMC members will ultimately vote,” he said in a Tuesday note.