Singapore Stocks & Gold Fall as Middle East Crisis Fuels Inflation Fears

Singapore stocks closed lower on Monday, March 9, 2026, as escalating tensions in the Middle East fueled concerns about inflation and potential interest rate hikes. The benchmark Straits Times Index (STI) finished the day down 1.89 percent at 4,756.61, mirroring a broader downturn across several Asian markets. While the decline was less pronounced than in South Korea, Japan, and Taiwan, the market reacted to rising oil prices – nearing US$120 a barrel – and the resulting economic uncertainty.

Oil Price Surge and Inflationary Pressures

The primary driver of the market’s downward trend was the surge in oil prices, triggered by strikes on energy infrastructure and disruptions to shipping routes, particularly through the Strait of Hormuz, a critical waterway for global oil trade handling approximately 20 percent of the world’s supply. According to the Straits Times, several Gulf nations have also implemented oil output cuts, exacerbating fears of tighter crude supplies. This combination of factors has stoked concerns about a resurgence of inflation, potentially prompting central banks to reconsider their monetary policies and raise interest rates.

Sector Performance: Aviation, Shipping, and Banks Under Pressure

Several key sectors experienced significant declines. Aviation and shipping companies bore the brunt of the impact, facing increased fuel costs. SATS, which provides air cargo handling, ground services, and inflight catering, saw its stock price fall 3.84 percent to close at $3.51. Singapore Airlines (SIA) also experienced a drop, declining 2.41 percent to $6.49, as global air travel continues to face disruptions in the second week of the conflict. Yangzijiang Shipbuilding initially tumbled nearly 5 percent before partially recovering to close at $4.10, despite a strong second-half net profit of 4.5 billion yuan (S$837 million) reported the previous week.

The banking sector also felt the pressure, with DBS dropping 1.25 percent to $54.31, OCBC Bank falling 1.73 percent to $20.46, and UOB retreating 1.55 percent to $35.51. These declines reflect broader market anxieties and potential impacts on loan growth and asset quality should the economic situation deteriorate.

Energy Stocks Buck the Trend, Sembcorp Rebounds

Interestingly, some oil and energy stocks listed on the Singapore Exchange (SGX) defied the broader market decline. Rex International, Geo Energy Resources, and RH Petrogas all saw gains, likely benefiting from the increased oil prices. Sembcorp Industries also experienced a partial recovery, refuting reports of damage to its Fujairah F1 power and water plant in the United Arab Emirates following Iranian missile strikes. Its shares closed down a modest 0.35 percent at $5.70. The company’s Fujairah F1 plant is 40 percent owned by Sembcorp, and it also operates facilities in Oman, where, according to a DBS research note, approximately 8 percent of its net earnings are generated.

Gold Prices Retreat Amid Dollar Strength

Despite initial gains linked to geopolitical uncertainty, spot gold prices fell 0.73 percent to US$5,130.12 an ounce on March 9, reversing the first weekly decline in over a month. This decline was attributed to a strengthening US dollar and the surge in energy prices, which fueled speculation that the US Federal Reserve might maintain or even increase interest rates. Higher interest rates typically weigh on gold prices, as the metal does not yield interest. However, gold remains up nearly 18 percent since the start of the year, demonstrating its continued appeal as a safe-haven asset.

Regional Comparisons and Singapore’s Relative Resilience

The Singapore market’s decline was less severe compared to other Asian markets. South Korea’s Kospi index plummeted 5.96 percent, Japan’s Nikkei sank 5.2 percent, and Taiwan’s TAIEX index lost 4.43 percent. Hong Kong’s Hang Seng Index dropped 1.35 percent. MarketWatch data shows the STI’s performance relative to other regional indices. Glenn Thum, research manager at Phillip Securities Research, explained that the STI’s more muted decline was due to its defensive, bank-heavy composition and limited exposure to the technology and semiconductor sectors, which have experienced steeper sell-offs in other Asian markets. The geopolitical energy shock, he added, actually reinforces a “higher-for-longer” interest rate outlook, which benefits the lending margins of Singapore’s local banks.

Carmen Lee, head of equity research at OCBC group research, further emphasized Singapore’s market resilience, attributing it to the strength and stability of the companies within the STI. She noted that most STI constituents operate in stable, non-oil-related industries, unlike markets with higher valuations or greater exposure to the technology sector, which are currently facing increased selling pressure.

Looking Ahead: Monitoring Geopolitical Developments and Central Bank Responses

The immediate outlook for Singapore stocks remains closely tied to the evolution of the Middle East crisis and the responses of central banks. Investors will be closely monitoring oil price movements, geopolitical developments, and any signals from the US Federal Reserve regarding its monetary policy stance. The performance of key sectors, particularly aviation, shipping, and banking, will also be crucial indicators of the market’s overall health. Further volatility is expected in the short term, but Singapore’s relatively stable economic fundamentals and strong banking sector may provide some degree of resilience against the broader regional downturn. The next key data point will be the release of Singapore’s inflation figures for March, which will provide further insight into the potential impact of rising oil prices on the local economy.