Singapore Pre-Market Friday: Oil and yields rise, Singapore Airlines, Malaysia eyed

Singapore two-dollar billsSingapore two-dollar bills

Singapore shares will start trade on Friday with limited signals, with Singapore Airlines’ earning in focus, while a positive lead from regional markets may be partly offset by Wall Street’s lower close on Thursday.

Singapore stocks to watch Friday: Singapore Airlines, CapitaLand Commercial Trust, Venture, SCI

The Dow Jones Industrial Average slipped 0.22 percent on Thursday, while the S&P 500 was down 0.09 percent and the Nasdaq was off 0.21 percent. Futures were nose up early Friday.

The Nikkei 225 index was up 0.20 percent at 8:07 A.M. SGT.

The dollar index, which measures the greenback against a basket of currencies, was at 93.50 at 7:30 A.M. SGT on Friday, appearing set to end the week at its highest since December after starting the week around 92.26. The 10-year U.S. Treasury yield climbed to 3.11 percent by 8:10 A.M. SGT after touching a seven-year high overnight.

Oil prices surged to their highest levels since late 2014 amid renewed concerns about Iran’s oil output with the threat of renewed sanctions.

Nymex WTI crude oil futures were up 0.14 percent at US$71.59 at 7:40 A.M. SGT, while ICE Brent crude oil futures were up 0.03 percent at US$79.30 at 5:59 A.M. after climbing over US$80 overnight, according to Bloomberg data.

Higher oil prices may help to ease some concerns about Malaysia’s fiscal picture after the new government fulfilled a campaign promise to end the goods and services tax (GST), which had been a major source of government revenue.  Bloomberg reported the consumption tax had raised US$11 billion in 2017 alone, while the Nikkei Asian Review indicated every US$1 rise in oil prices would generate around 300 million ringgit for the government, with the previous administration’s budget only assuming an oil price of US$52 a barrel.

Any relief that generates was likely to free up time for watching the spectacle of Malaysian police raids on the homes of former prime minister Najib Razak, with reports saying nearly 300 Hermes luxury handbag boxes were removed from a condominium, in addition to a haul of other valuables. It invited comparisons with Imelda Marcos’ famous shoe horde. Prices for Hermes handbags can start around US$12,000 and have been known to rises as high as US$300,000 in auctions.

Since Malaysia’s shock election outcome, the former prime minister has faced an investigation over billions of U.S. dollars missing from Malaysian state fund 1MDB; he has frequently denied wrongdoing and during his administration, the attorney general had declined to proceed with a case, even as other countries, including the U.S., Switzerland and Singapore, were investigating it for money-laundering.

Trade jitters were likely to continue after U.S. President Trump, who has long and loudly claimed extraordinary deal-making abilities, reportedly said on Thursday that he doubted his ability to strike any rapprochement on trade with China. Talks between the Trump administration and Chinese representatives began on Thursday.

Trump’s comments came even as China reportedly put an offer on the table to help reduce the U.S. trade deficit.

Separately, Trump’s Nafta negotiator said the U.S., Canada and Mexico are “nowhere near close to a deal” on updating the agreement, according to a Bloomberg report; Trump has repeatedly threatened to walk away from the pact.