STI steadies in June as analyst predicts rebound

The index's resilience follows a volatile April in which the STI touched the psychologically significant 5,000.

Singapore shares held steady in early June trading as DBS Research flagged the month as a tactical accumulation window ahead of an expected July rebound, even as geopolitical pressure from the Strait of Hormuz continues to weigh on regional sentiment.

The Straits Times Index has trended higher to just above the 5,050 level, its highest point since the US-Iran conflict began, supported by Singapore's safe-haven status, strong AI-driven export growth, and Monetary Authority of Singapore measures including the Equity Development Programme and value unlock initiatives.

DBS maintains a year-end STI target of 5,250, premised on oil flows gradually resuming through the Strait of Hormuz.

The index's resilience follows a volatile April in which the STI touched the psychologically significant 5,000 level twice before retreating to close the month at 4,912.69, up 0.6% month on month, according to UOB Kay Hian.

The bank warned that a complete breakdown in US-Iran talks could drag the index as low as 4,300.

DBS outlined a similar worst-case scenario, flagging a potential fall below the 200-day exponential moving average to 4,450 or even 4,300 if talks collapse entirely, a ceasefire is revoked, the US naval blockade tightens, and the crisis escalates into a regional conflict.

Singapore's manufacturing PMI rose to 50.7 in April from 50.5 in March, marking an eighth consecutive month of expansion and the strongest reading since February 2025, driven by stronger new orders, output, exports, and employment, though supply-side constraints and cost pressures persisted, UOB Kay Hian said.

Domestically, the MAS tightened monetary policy in April by slightly increasing the pace of Singapore dollar nominal effective exchange rate appreciation to curb imported inflation, signalling a shift toward a less accommodative stance amid concerns over supply shocks and LNG prices.

Asian markets traded mixed under the same geopolitical pressure. Hong Kong's Hang Seng Index opened at 25,708.64 before edging down to 25,544.06 in early trade, while Japan's Nikkei 225 rose from an open of 56,421.46 to trade around 56,578.19. In mainland China, the Shanghai Composite opened at 3,971.20 and rose steadily to peak at 3,982.36 by mid-morning.

DBS noted tentative de-escalation in the US-Iran conflict, with a proposed 60-day memorandum of understanding framework helping to reduce near-term risks. Brent crude is currently rangebound between US$90 and US$100 per barrel, with DBS projecting a moderation towards US$85 to US$90 upon confirmation of a formal deal. Should talks collapse, the bank warned Brent could revert to US$110 per barrel and above.

The STI crossed 5,000 points in February 2026 with a year-to-date rise of 8.1%, led by UOL Group, Hongkong Land, City Developments, Keppel, and ST Engineering. Singapore's GDP expanded 5.0% in 2025, following 5.3% growth in 2024, driven by manufacturing, finance, electronics, and AI-related demand. The Ministry of Trade and Industry forecasts 2026 GDP growth of between 2% and 4%.

DBS expects June softness driven by the FIFA World Cup, the US summer holiday season, and Singapore school holidays, but sees these as temporary factors ahead of a July recovery supported by seasonal tailwinds and a potential Strait of Hormuz reopening.