Singapore’s market will head into trade on Tuesday with a positive lead from Wall Street, where shares focused on recent positive economic data and took their eyes off the geopolitical pot waiting to boil.
The Dow Jones Industrial Average ended Monday up 0.72 percent and the S&P 500 gained 0.45 percent, while the Nasdaq tacked on 0.69 percent to close at a record high amid a rally in tech stocks. Futures for the three indexes were nearly flat early on Tuesday.
Japan’s Nikkei 225 index opened higher, trading up 0.38 percent at 8:01 A.M. SGT. STI futures were at 3470 on Monday, compared with Monday’s close at 3467.48, according to Bloomberg data.
“Stock market investors remain utterly unfazed by the prospects of trade tariffs or even higher interest rates as consecutive monthly payroll numbers continue to support the Goldilocks economy sweet spot scenario,” Stephen Innes, head of Asia Pacific trading at OANDA, said in a note on Tuesday.
“So far, investors remain focused on a broader subset of U.S. economic data while concluding that U.S. earnings and the economy are sufficiently robust to keep the equity bull market intact,” he added.
Trade war fears
The gains came as traders turned a blind eye to signs that the Trump administration is escalating its trade war. The U.S. has begun imposing tariffs on some imports and has already seen pushback and retaliatory tariffs in response. In a strategic blow, Canada has proposed tariffs on imports on maple syrup from the U.S., which primarily come from Maine.
Lawrence Summers, who was Treasury secretary from 1999-2001 and an Obama economic adviser, wrote in a Washington Post op-ed that the Trump administration’s negotiation tactics were scattershot and lacked well-defined objectives as well as succeeding in alienating allies.
The Trump administration is also probing whether to impose tariffs on imports of autos and auto parts, a move likely to hurt profitability across the global auto industry, including in the U.S.
Markets were also ignoring another round of chaos from the Trump White House. In what could set the stage for a constitutional crisis and an impeachment, U.S. President Trump has claimed on Twitter, citing unnamed legal scholars, that he had an “absolute right” to pardon himself. Accepting a pardon is generally considered an admission of guilt. Legal opinions have generally said that presidents can not pardon themselves, as it is an issue that arose during the Nixon administration.
Nymex WTI crude oil futures for July were up 0.43 percent at US$65.03 at 8:11 A.M. SGT, after slipping below US$65 in the overnight session and well off highs around US$72.90 touched in May, while ICE Brent crude futures for August were up 0.19 percent at US$75.43 at 8:11 A.M. SGT, off its May high of US$80.50, according to Bloomberg data.
“It’s all about supply, whether it’s OPEC raising output or U.S. increasing production, all roads lead to higher global oil supplies, which is leaving oil traders shaking in their boots,” Innes said. “The long liquidation continues all the while hedge funds continue to increase short bets for the third consecutive week.”
The dollar index was at 94.04 at 6:05 A.M. SGT, after dipping as low as 93.70 overnight. The euro continued to regain the ground it lost in May amid Italian political turmoil. The euro was fetching US$1.1698 at 8:30 A.M. SGT, after trading as high as US$1.1735 overnight, but still above May levels of as low as US$1.1541.
Correction: The previous euro level has been corrected.