UOB shares rise after Fed hikes rates; yen weakens against Singdollar: Markets this week

SINGAPORE, 21 SEPTEMBER 2026 —

In this column, ST’s business correspondents unpack the latest developments in Singapore and global markets during the week – and explain what they mean for investors.

UOB shares rose 1.26 per cent across the week to close Sept 18 at $41.78, while DBS Bank slipped 0.18 per cent to $76.86 and OCBC Bank fell 0.7 per cent to $31.38.

SINGAPORE – The US Federal Reserve’s latest rate hike on Sept 16 offered a potentially more favourable earnings backdrop for Singapore banks by supporting local interest rates and slowing the compression in net interest margins (NIMs), although this did not translate into broad share price gains over the week. NIMs measure how much a bank makes from lending after accounting for its funding costs.

UOB rose 1.26 per cent across the week to close Sept 18 at $41.78, while DBS Bank slipped 0.18 per cent to $76.86 and OCBC Bank fell 0.7 per cent to $31.38. The Fed raised its benchmark interest rate by 25 basis points to a target range of 3.75 per cent to 4 per cent for the first time since 2023, as inflation remained elevated and the US economy stayed resilient.

Most analysts now expect further rate hikes in the months to come, with RHB expecting one more 25-basis-point hike and UOB anticipating two more hikes in December 2026 and the first quarter of 2027, followed by a pause for the remainder of 2027.

For Singapore banks, a higher-for-longer US rate environment could provide some relief to NIMs, as elevated US rates can filter through to Singapore interest rates as investors demand comparable returns here to keep their money in Singapore-dollar assets. This would allow banks to reprice loans at higher rates and support net interest income (NII), which had been under pressure as rates declined during the first half of 2026.

Macquarie Equity Research’s Jayden Vantarakis said that while all three local banks stand to benefit from higher Singapore rates, UOB has the most to gain. About 43 per cent of UOB’s loans are denominated in Singapore dollars, compared with 37 per cent to 38 per cent for DBS and OCBC. UOB also earns more NII in its revenue mix, at 66 per cent, compared with about 58 per cent for its two peers, said Vantarakis.

The Japanese yen weakened against the Singdollar even after the Bank of Japan (BOJ) raised rates by 25 basis points to 1.25 per cent on Sept 18, its highest level since 1995. The yen was trading at 122.941 against the Singdollar on Sept 18, from 121.148 on Sept 11. The yen also slumped against the greenback, trading at 156.880 per US dollar on Sept 18, from 153.571 on Sept 11.

Still, BlackRock head of global fixed income for Asia-Pacific Navin Saigal said the BOJ’s rate hike marked another step in Japan’s gradual but important transition away from the deflationary environment that shaped much of the past three decades. “The decision should therefore be viewed...

more as part of a broader transition towards a more normal economic and interest-rate environment.” He added that the move could reinforce confidence that the BOJ is serious about gradually raising interest rates from exceptionally low levels, which should strengthen the yen and reduce the need for investors to demand higher yields on longer-term Japanese government bonds. T.

Rowe Price portfolio specialist for Japanese equity strategy Daniel Hurley added that he expects the BOJ to continue tightening its monetary policy as domestic conditions warrant further rate increases and the yen remains “very cheap” on a range of measures. Gold edged up above US$4,300 per ounce on Sept 18, after a temporary slump following the Fed’s decision to raise interest rates.

However, gains were limited by a stronger US dollar, which remained supported after the Fed raised rates and signalled further hikes in the coming months. This means that gold becomes more expensive for non-US buyers. Higher yields on dollar-denominated assets such as US Treasuries can also make gold relatively less attractive, as the yellow metal does not pay interest.

Nevertheless, DWS said that it maintains a positive view on gold, supported by continued central bank buying, fiscal concerns and diversification away from US Treasuries. The asset manager expects gold to reach US$5,000 per ounce by September 2027, but noted that high bond yields are likely to limit the upside potential of the precious metal. Oil prices fell about 2 per cent on Sept 18, although they stayed above US$100 a barrel.

Reports indicated that Saudi Arabia was restoring capacity on its damaged East-West pipeline faster than expected and diverting additional crude exports through Oman, easing concerns about supply disruptions. Still, DBS economists pointed out on Sept 18 that there is no resolution to the Middle East crisis in sight. High oil prices could still push inflation up, which may pressure some central banks to raise rates, the economists said.

UOB Kay Hian also cut the price target to $6.16, from the previous $6.71, and slashed SIA’s net profit guidance for the second quarter of the 2027 financial year to between $230 million and $370 million, from between $240 million and $460 million. “Jet fuel prices are likely to remain elevated in the near term, creating continued pressure on SIA’s profitability,” said analyst Roy Chen.

SIA posted a net loss of $76 million for the first quarter, down from a net profit of $186 million a year ago, partly because of rising jet fuel costs. Metrocon made its debut on the Singapore Exchange’s Catalist board on Sept 15, closing its first trading day at 23.5 cents, or 17.5 per cent above its 20 cents placement price.

This followed Metrocon’s completion of a $28 million reverse takeover of embattled property developer Hatten Land, which allowed the geotechnical foundation engineering firm to be listed without an initial public offering.

Related: UOB · Federal Reserve · Singapore