Singapore pre-market Monday: Positive cues as US-China trade war tensions ease

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Singapore’s shares appear set to open trade on the front foot on Monday amid signs the U.S.-China trade talks may have eased tensions.

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The Dow Jones Industrial Average ended Friday nearly flat, up just 0.0045 percent, while the S&P 500 index was down 0.26 percent and the Nasdaq was off 0.38 percent. But futures for the three indexes were pointing sharply higher early Monday Singapore hours, with DJIA futures up nearly 200 points.

Japan’s Nikkei 225 index opened just slightly in the green, up 0.067 percent at 8:07 A.M. SGT.

The world spent much of the weekend focused on the U.K. wedding of an actress to an out-of-work former soldier.

But in the U.S., some global trade jitters might ease after China over the weekend agreed to “significantly” increase its imports of U.S. goods and services, but the official statements lacked any confirmation of the White House’s claim that the mainland had agreed to cut its trade surplus with the U.S. by US$200 million. Reuters reported that figure would likely be “impossible” as it would require massive changes to the two countries’ commerce. The statement also lacked details on whether the two countries would carry through with their tariff threats.

However, Bloomberg reported that U.S. Treasury Secretary Steven Mnuchin said the trade war was being put on hold and tariffs wouldn’t be imposed while the U.S. tries to execute the framework from the talks. To be sure, U.S. President Trump has a history of undermining other members of his administration at the drop of a hat, but analysts were positive on the outcome.

“The risk of a growth debilitating trade war between the U.S. and China has now subsided substantially,” Shane Oliver, head of investment strategy at AMP Capital, said in a note over the weekend.

“This news is positive for global share markets as investors had been fretting ahead of the May 21 deadline. Shares in U.S. companies with significant exposure to exports to China will be key beneficiaries. But it’s also a big positive across Asia and for Australian resources stocks given supply chain linkages to Chinese companies that export to the U.S.,” he said.

Others pointed to the potential for the news to boost oil prices.

“The U.S. and China agreeing to no trade war will be positive for oil prices given that the possibility of a full-out trade war would have dealt a significant blow to global growth,” Stephen Innes, head of Asia Pacific trading at OANDA, said in a note on Monday.

Separately, South Korea’s President Moon Jae-in and Trump reportedly held talks over the weekend in an effort to salvage the planned talks between Trump and North Korea’s leader Kim Jong Un, which had been planned for June. The North has threatened to pull out of the talks, with demands including putting a stop to ongoing U.S.-South Korean military drills, which the U.S. conceded.

The ever-present probe into the Trump campaign’s contacts with Russian operatives may remain a sentiment dampener. Trump took to Twitter on Sunday, U.S. time, to say he would order the Department of Justice to look into whether his campaign was infiltrated by the DOJ or FBI. It’s an action some analysts said may be construed as obstruction of justice.

Trump also drew attention to a New York Times article which revealed that members of the Trump campaign also met with agents of other countries, including the U.A.E., about influencing the election.