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SINGAPORE, Jan 23, 2008 (AFP) - Singapore share prices closed 4.08 percent higher Wednesday as investors reacted positively to the US Federal Reserve's unexpected cut to its key interest rate, dealers said.
They said the STI rebounded from the opening bell along with other regional bourses which cautiously welcomed the Fed's move to slash interest rates by 75 basis points to 3.50 percent.
The Straits Times Index (STI) closed 117.07 points higher at 2,983.62.
"I think the Fed's decision was a wise one in that if it didn't happen the US market would have tanked big time," said Song Seng Wun, a regional economist with CIMB-GK Research in Singapore.
"But it hasn't answered the market question of whether it will turn around the US economy. We did see the market come back quite strongly. The question is whether it will be sustained or not."
The index fell 1.73 percent Tuesday and 6.03 percent Monday in line with the fears of investors worldwide who sent global equity markets tumbling over the fate of the US economy.
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