Singapore stocks hit record high; Asian FX subdued

Singapore's stock market achieved a new high on Tuesday, buoyed by the city-state's optimistic annual growth forecast. The Singapore Exchange's FTSE Straits Times Index surged nearly 1.3% to a record 5,774.21, on track for three consecutive days of gains. The trade ministry upped its 2026 growth forecast for Singapore from 2.0%-4.0% to 4.5%-5.5%, citing robust global artificial intelligence (AI) investment and a milder impact from the Iran war.

This growth upgrade supports Singapore equities by bolstering earnings expectations for cyclical sectors and confirming the economy's benefit from increased AI-related investments, according to Gary Tan, a portfolio manager at Allspring Global Investments. The stronger-than-anticipated GDP expansion of 5.9% in the second quarter further enhanced investor confidence in Singapore's economy, which is also being propelled by stronger AI-related investment activity.

Additionally, three of Singapore's largest banks reported improved profits, driven by the growing wealth of Asia's affluent population. The Singapore dollar traded at 1.2799 against the US dollar, outperforming regional peers and up 0.5% so far this year. In contrast, Asian currencies faced pressure due to subdued hope for a U.S.-Iran peace deal.

The Thai baht weakened to 33.0325 per dollar, while the Philippine peso dropped to a one-week low of 61.079. Oil prices surged to a one-week high after the diminished expectations of a peace deal, affecting energy-importing countries and their currencies. The Indonesian rupiah, for instance, lost up to 0.4% to 17,822 per dollar, marking its worst year-to-date performance and worsening Jakarta's stock market performance.