Singapore market trends Friday: US trade war hits Daimler, border crisis, dollar weakens

Singapore street sceneSingapore street scene

Singapore’s shares may end the week on the back foot, as the U.S. trade war was set to continue spooking investors and as traders may be unwilling to hold positions over the weekend.

The Dow Jones Industrial Average fell 0.80 percent on Thursday, the S&P 500 shed 0.63 percent and the Nasdaq lose 0.88 percent. Futures for the three indexes were a tad positive early on Friday.

The Straits Times Index shed 0.48 percent to 3300.00 on Thursday; July futures for the STI were at 3291 on Thursday.

The Nikkei 225 index was down 0.89 percent at 8:10 A.M. SGT.

Trade war fears

Trade war fears got a spike higher overnight after storied carmaker Daimler warned that the tensions would hurt its sales and it cut its 2018 profit outlook, citing the tariffs on cars exported from the U.S. to China. Those tariffs were in retaliation after the U.S. imposed tariffs on imports from China.

BMW, which also exports vehicles to China from the U.S., said that while it was keeping its profit outlook unchanged for this year, that depended on political conditions remaining stable, Reuters reported.

The U.S. has launched a trade war with China, imposing 25 percent tariffs on US$50 billion worth of goods imported from the mainland; China has retaliated and in response, U.S. President Trump has threatened even more tariffs on Chinese goods. Additionally, on Friday, the European Union’s retaliatory tariffs will take effect on select U.S. goods after the Trump administration imposed tariffs on steel and aluminum imports from U.S. allies, claiming it was necessary for national security reasons.

There were some signs of rapprochement, with Bloomberg reporting, citing three people familiar with the matter, that some White House officials were considering resuming talks with China. However, the general state of chaos at the White House means this could easily be nixed, especially as earlier this week, Trump trade adviser Peter Navarro earlier this week reportedly said that the tariffs were “necessary to defend this country.”

Immigration

In the U.S. the battle over the human rights crisis at the southern U.S. border, with U.S. President Trump having ordered infants and children separated from parents trying to enter the U.S. may have further rattled any remaining confidence in the current administration.

Trump on Thursday signed a vaguely worded executive order to halt the separations, after claiming he was powerless to stop them, but analysts were struggling to decipher how much the order changes the actual practice. More than 2,300 children and infants have been separated from their parents, with pictures of them in cages and in internment camps sparking outrage.

Currencies

The dollar index, which measures the greenback against a basket of currencies, was at 94.83 at 8:11 A.M. SGT, off levels as high as 95.50 overnight.

The U.S. 10-year Treasury yield was at 2.912 percent at 8:21 A.M. SGT, off levels as high as 2.9450 percent on Thursday. That was after trading as low as 2.857 percent earlier in the week. Bond prices move inversely to yields.

The safe-haven yen strengthened a tad; the dollar/yen was at 109.926 at 8:27 A.M. SGT, after trading as high as 110.914 on Thursday, according to DZHI data.

The euro was fetching US$1.1615 at 8:25 A.M. SGT, after trading in a US$1.1507 to US$1.1634 range on Thursday, according to DZHI data.

The Singapore dollar was fairly stable. The dollar/sing was at 1.3574 at 8:28 A.M. SGT, after spiking as high as 1.3582 overnight.

Oil

Nymex WTI crude oil futures for August were up 1.39 percent at US$66.45 a barrel at 8:33 A.M. SGT, while ICE Brent crude futures for August were up 1.44 percent at US$74.10, according to Bloomberg data.

Bloomberg reported that at OPEC talks in Vienna on Thursday, Iran rejected oil production increases, implying that the organization may fail to secure an agreement. That comes as production from Iran and Venezuela was set to decline amid U.S. sanctions.

World Cup

On Thursday, Denmark and Australia played to a 1-1 draw, France beat Peru and Argentina lost to Croatia in a fairly crushing 0-3 game.

The weekend matches may keep traders glued to their screens. On Friday, favorite Brazil will be playing Costa Rica, after Brazil tied with Switzerland in an earlier match. Costa Rica previously lost to Serbia.

Nigeria and Iceland will also hit the pitch on Friday, as will Serbia and Switzerland.

Saturday will bring Mexico a chance to show its surprise win over favorite Germany wasn’t necessarily a fluke as it goes up against South Korea. And Germany gets a chance to redeem itself as it plays Sweden, while Belgium will also match up with Tunisia.

On Sunday, England will match Panama, Japan will play Senegal and Poland goes up against Colombia.

World Cup organizer FIFA reportedly said on Thursday that game attendance has already topped 1 million, with average stadium occupancy at 97 percent.

Correction: An earlier version of this article incorrectly spelled BMW. It has since been corrected.

Get Shenton Wire headlines in your inbox

* indicates required