Monthly Market Wrap: Banks kept the STI ticking as investors grappled with rates, oil and geopolitics

Date: October 1, 2026

• Banks drove the STI to a new all-time high above 5,800 during the month
• The STI recorded a loss of 1.4% at 5,675.88 over the month
• US Treasury yields spiked up on inflation worries, continued US-Iran war
• Oil surged above US$100 as Middle East fighting intensified
• Fed raised rates by 25 basis points
• Institutional outflows amounted to S$336m over 4 weeks: SGX Research
• Economists raised Singapore’s 2026 growth forecast to 5%
• Keppel DC REIT to raise funds for two Japanese data centres
• Multi-Chem senior staff interviewed by CPIB
• Addvalue shareholders approved Nasdaq spinoff

 

An all-time high above 5,800 in Sep

September proved to be another eventful month for investors, with Singapore equities having to contend with sharply higher US bond yields, another interest-rate hike from the US Federal Reserve and a renewed surge in oil prices as fighting in the Middle East intensified.

Yet for all the macroeconomic uncertainty, the story at home remained remarkably familiar: as always, it was the three banks that largely determined the daily direction of the Straits Times Index (STI) which lost about 80 points or 1.4% over the month at 5,675.88.

However, for the third quarter, the index posted a gain of about 505 points or 9.8%.

DBS, OCBC and UOB continued to dominate trading and index movements, reinforcing just how dependent the benchmark has become on its three heavyweight financial stocks.

On 4 Sep, their gains helped propel the STI to a new record close of 5,801.96.

The external environment, however, became much less comfortable as September progressed.

 

US Treasury yields spiked up on inflation worries, continued US-Iran war

US Treasury yields rose sharply as investors reassessed the inflation outlook and the likely path of monetary policy. The benchmark 10-year yield approached 5% during the month and subsequently reached around 5.15 per cent, its highest level since 2007.

Longer-dated yields also surged, with the 30-year Treasury yield reaching levels not seen for more than two decades.

For equities, rising bond yields are rarely welcome. Higher risk-free rates make shares relatively less attractive, increase companies financing costs and place pressure on valuations, particularly those of growth stocks whose earnings are expected far into the future.

 

Institutional outflows amounted to S$336m over 4 weeks: SGX Research

In a 28 Sep Market Update, SGX Research said institutional investors recorded net buying of S$104 million and S$13 million in the first two weeks of September, before shifting to net selling of S$292 million and S$161 million in the subsequent two weeks. This resulted in aggregate net outflow of S$336 million over the four-week period.

“Against this broader market shift, 35 stocks moved in the opposite direction, from aggregate institutional net selling over 31 August–11 September to net buying in both weeks from 14–25 September’’ reported SGX Research.

“Yangzijiang Shipbuilding recorded the largest recent inflow at S$73.78 million, following S$1.97 million of net selling in the preceding two weeks’’.

SGX Research also said that in the S-REIT Sector, UI Boustead REIT and CapitaLand Ascott Trust fully reversed their preceding two-week institutional outflows, recording recent two-week net buying of S$17.23 million and S$6.70 million, while Mapletree Pan Asia Commercial Trust recorded a partial reversal.

 

Economists raised Singapore’s 2026 growth forecast to 5%

One piece of encouraging news came early in the month when private-sector economists upgraded their expectations for Singapore’s economy.

The median forecast in the Monetary Authority of Singapore’s September Survey of Professional Forecasters put 2026 GDP growth at 5% substantially higher than the previous forecast of 3.5% and near the upper end of the Government’s official 4.5 to 5.5% forecast range.

The upgrade followed a strong first half, with second-quarter GDP expanding 5.9% after 6.3% growth in the first quarter. Economists also raised their forecasts for several major sectors, including manufacturing, finance and insurance, construction and wholesale and retail trade.

 

Keppel DC REIT to raise funds for two Japanese data centres

Keppel DC REIT announced the acquisition, together with Keppel, of stakes in two freehold hyperscale data centres in Greater Tokyo. The transaction values the assets at about 171 billion yen, or roughly US$1.1 billion.

On completion, Keppel DC REIT will have an effective interest of 88.62% in each property.

To help finance the acquisitions, the REIT launched a private placement initially targeted at S$600 million. Strong demand allowed the exercise to be increased to S$625 million, with the placement reportedly about 3.4 times covered.

The deal illustrates the continuing appetite among Singapore-listed REITs for overseas assets and, in particular, exposure to data centres, where structural demand remains underpinned by cloud computing, digitalisation and artificial intelligence.

 

Fed raised rates by 25 basis points

The bond market’s concerns were subsequently validated when the US Federal Reserve raised its federal funds target range by 25 basis points to 3.75-4% on Sep 16.

More important than the hike itself was the message accompanying it. Policymakers’ projections pointed towards one more increase before the end of 2026, with inflation remaining stubbornly above the Fed’s 2% objective.

This represented an important shift in expectations. For much of the past few years, markets had grown accustomed to looking forward to eventual monetary easing.

 

Oil surged above US$100 as Middle East fighting intensified

Adding considerably to inflation concerns was another sharp rise in oil prices following renewed fighting involving the US and Iran. Brent crude climbed above US$100 a barrel, at one point passing US$107, while West Texas Intermediate rose above US$100.

 

Multi-Chem senior staff interviewed by CPIB

On the corporate front, attention turned to Multi-Chem after the company disclosed that four senior employees, including its chief executive and chief operating officer, had been interviewed by the Corrupt Practices Investigation Bureau.

Multi-Chem subsequently said its audit and risk management committee considered CEO Foo Suan Sai and COO Han Juat Hoon suitable to continue as directors and to perform their executive functions and responsibilities in full for the time being.

The company’s nominating committee noted that the two are founders who are intimately familiar with the group’s operations and that their continued involvement was important for business continuity.

Multi-Chem’s shares plunged S$0.22 or 7.8% to S$2.58 between Monday and Wednesday following the news.

 

Addvalue shareholders approved Nasdaq spinoff

Another notable corporate development came from Addvalue Technologies.

Shareholders approved the proposed spinoff and Nasdaq listing of wholly owned subsidiary Addvalue Solutions (AVS), together with the associated dilution of Addvalue’s shareholding.

AVS houses the group’s business and commercial activities involving its Inter-Satellite Data Relay System, which provides connectivity between satellite operators and their space assets.

Under the plan, the relevant businesses will be grouped under a newly incorporated holding company which will undertake an initial public offering on Nasdaq.

For Addvalue shareholders, the exercise potentially provides a mechanism through which the market can separately value the space-related business and gives the operation access to the much deeper US capital markets.