AFTER falling 47 points since the start of the week, the Straits Times Index on Wednesday bounced 26.8 points to 2,868.74 in line with an overnight rally on Wall Street that probably also helped Hong Kong and China stocks to a sharp Wednesday rebound.Observers said the gains were most likely because of traders positioning themselves for a probable "relief rally" that should occur if the US Federal Reserve refrains from raising its short-term rate at its Federal Open Market Committee meeting on Thursday.
Based on the latest prices in the federal funds futures market, the probability of a rate hike this week is 32 per cent. The probability that the Fed will postpone the first hike in nine years to December is 62 per cent.
Overall, trading was very cautious, and this was manifest in the low volume done - 1.3 billion units worth S$1.1 billion. Excluding warrants, the advance-decline score was 275-126.
Blue chips that contributed the most to the index's bounce included Jardine stocks Jardine Matheson and Hongkong Land, while there were contributions from rises in UOB and OCBC.
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