Singapore pre-market Wednesday: Wall Street falls as Korean and trade tensions eyed

Singapore shares may get bogged down on Wednesday, weighed by negative leads from regional markets and Wall Street, with worries over U.S.-China trade and Korean tensions reemerging.

Singapore stocks to watch Wednesday: Hyflux, Raffles Education, Sembcorp Industries

Futures for the Straits Times Index were suggesting a flat open, with the level at 3542, according to Bloomberg data, just a whisker below the 3543.18 that the index closed at on Tuesday.

The Nikkei 225 index opened lower, trading down 0.36 percent at 8:03 A.M. SGT.

The Dow Jones Industrial Average fell 0.72 percent, S&P 500 shed 0.31 percent and the Nasdaq lost 0.21 percent. Futures for the three indexes had turned nose down.

Oil prices

Oil prices remained elevated amid a growing brew of geopolitical concerns, including Trump violating the Iran nuclear deal and fresh U.S. sanctions on Venezuela.

Nymex WTI crude oil futures were essentially flat at US$72.19 a barrel at 8:01 A.M. SGT, while ICE Brent crude futures were down just 0.08 percent at US$79.51 at 8:01 A.M., according to Bloomberg data.

The dollar index, which measures the greenback against a basket of currencies, was at 93.53 at 8:06 A.M. SGT, off highs around 93.85 touched earlier in the week, but still well above the levels under 93 last week.

North Korea

Tensions on the Korean peninsula could be back on the list of geopolitical worries. U.S. President Trump cast doubt on his upcoming summit with North Korean leader Kim Jong Un, reportedly saying there was a “substantial chance” it wouldn’t happen. That was after North Korea had already threatened to walk away, pointing to U.S.-South Korea military drills, with the Trump administration conceded to some of the North’s demands on toning them down.

Not holding the talks would likely be seen as a major failure for Trump, who has touted that “everyone thinks” he would deserve the Nobel peace prize for agreeing to the talks after spending months hurling insults at Kim over Twitter.

Trade worries

Optimism that U.S.-China trade tensions may be easing, with U.S. Treasury Secretary Steven Mnuchin saying the trade war was “on hold,”  may have taken a dent after a New York Times report of infighting within the Trump administration over its negotiations with the mainland. Additionally, Trump was reportedly “unsatisfied” with the outcome. This raises the specter that he may not follow through.

Additionally, critics, including some within the Republican party, have said Trump is ceding too much to China on trade, according to a Washington Post report.

One of those concessions took place before talks even began, with Trump making an unusual move to interfere in regulatory efforts to restrict Chinese telco-equipment maker ZTE from doing business with U.S. companies after it allegedly violated sanctions on North Korea and Iran.

Speculation has been rife that the ZTE reversal may be related to the Trump Organization reportedly receiving as much as US$1 billion in financing from Chinese state-owned companies.

But Trump’s efforts to use ZTE as a trade bargaining chip, even if with questionable success, may come to naught after the Senate launched a bipartisan effort, on national security grounds, to block the administration from removing the sanctions without first showing it’s complying with U.S. law.

Other worries about the Trump administration were brewing in the background.

Scott Pruitt, Trump’s pick to lead the Environmental Protection Agency, reportedly banned journalists from several news organizations from attending public conferences.

Additionally, the probe of Russian interference in the U.S. election is continung apace. Evgeny Freidman, the business partner of Trump’s personal lawyer Michael Cohen, reportedly pleaded guilty on Tuesday in a tax fraud case as part of a plea deal to cooperate in investigations.