MOST Asian equities cheered the less hawkish stance of the US Federal Reserve (Fed), but Singapore shares closed flattish on Thursday (Dec 1).

The benchmark of 30 blue chip stocks, the Straits Times Index (STI), stood at 3,292.73 points, up only 0.1 per cent or 2.24 points, although it had opened 0.6 per cent higher.

Elsewhere in Asia, most markets closed higher, boosted by Wall Street overnight gains after the US central bank said it is moderating the pace of interest rate increases.

As the local banking trio account for over 40 per cent of the STI, slower rate hikes would mean limited upside for their net interest margins. DBS : D05 -0.68% and OCBC : O39 -0.72% closed lower, both dropping 0.7 per cent to S$34.95 and S$12.35 respectively. UOB : U11 +0.42%, interestingly, managed to rise by 0.4 per cent to S$31.33.

Investment products distribution platform iFast Corporation : AIY +8.11%, in contrast to the banks, jumped 8.1 per cent to S$5.73, as lower interest rates augur well for stock investing.

Amid the investor optimism, DBS Group Research remained wary of markets underestimating the Fed’s resolve to control inflation. In a report on Thursday, it noted that the Fed meeting is shaping up to be a “buy on rumour, sell on fact” event risk, and that markets are discounting the smaller 50-basis-point hike while ignoring the Fed’s earlier message to lift its 2023 target above 4.6 per cent.