Singapore market trends Wednesday: US trade flip-flops may offer support, energy shares eyed

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Singapore’s shares will face continued global trade tensions on Wednesday, but White House flip-flops may offer a sentiment boost on hopes the U.S.’s threats are mere bluster yet again.

Energy shares may be in focus after the U.S. appeared poised to cut off Iranian oil supplies, while some tech shares may find some relief on Trump administration trade U-turns.

Singapore stocks to watch Wednesday: CapitaLand, Sembcorp, No Signboard, Venture, Wilmar

“Very mixed policy messaging from an uncoordinated if not downright chaotic U.S. administration is stirring market volatility ahead of Friday’s expected guidance on investment restrictions,” Scotiabank said in a note on Tuesday. “It’s never clear who speaks for this administration so staying tuned is about the best advice.”

The Dow Jones Industrial Average ended Tuesday up 0.12 percent, the S&P 500 added 0.22 percent and the Nasdaq rose 0.39 percent.  The indexes were boosted off lows after energy stocks rallied amid Trump administration plans to cut off Iran oil supplies, while techs stabilized after a Wall Street Journal report that U.S. President Trump appeared to retreat from his plans to throttle foreign investment in U.S. tech companies.

“Without the oil gusher, markets would have closed lower as investors sentiment continues to wane as trade wars continue to percolate,” Stephen Innes, head of Asia Pacific trading at OANDA, said in a note on Wednesday.

Futures for the three indexes were nearly flat early on Wednesday.

The Straits Times Index ended Tuesday up 0.614 percent at 3280.87; July futures for the index were at 3270 on Tuesday, while August futures were at 3237.

Japan’s Nikkei 225 index opened nose down, trading off 0.12 percent at 8:21 A.M. SGT.

Trump retreats on tech restrictions?

In what is likely another sign of White House chaos, Trump indicated he might scrap his plan to restrict Chinese investments in U.S. technology companies and instead use existing rules to conduct security rules, according to a Wall Street Journal report on Tuesday U.S. time.

That marked a sharp reversal from his previous positions and from recently expressed views of his top aides.

It’s not the first time Trump has made a U-turn on whether to restrict Chinese technology companies.

Earlier this month, he took the highly unusual step of interfering in the regulatory process to save Chinese telecom-equipment maker ZTE, which had been hit with harsh penalties for violating sanctions on North Korea and Iran.

Speculation has been rife that the ZTE reversal may have been related to the Trump Organization reportedly receiving as much as US$1 billion in financing from Chinese state-owned companies. The U.S. Congress is weighing whether to step in and impose tougher penalties on ZTE.

Another Trump tweet storm on trade

On Tuesday, U.S. President Trump took to Twitter to launch an attack on iconic motorcycle maker Harley Davidson, in a move that may violate government ethics rules.

Harley Davidson announced on Monday that it would move some production of motorcycles destined for Europe out of the U.S. due to retaliatory tariffs of 31 percent in Europe, up from 6 percent previously.

Trump threatened the company would be forced to pay an unspecified “big tax” if it tried to sell products made overseas back into the U.S. market; the company isn’t moving all of its production overseas.

Trump also issued a false statement over Twitter that his administration has gotten other countries to reduce tariffs and trade barriers; in fact, U.S. actions have spurred retaliatory actions globally and may already be on the road to forcing some U.S. companies out of business altogether.

 

 

Oil

Nymex WTI crude oil futures for August were up 0.13 percent at US$70.62 a barrel at 8:10 A.M. SGT, while ICE Brent futures for August were up 0.24 percent at US$76.49 at 8:08 A.M. SGT, according to Bloomberg data.

That was after a senior U.S. State Department official said U.S. officials were visiting European and Asian countries to tell them to eliminate oil imports from Iran by November 4, according to a Washington Post report. The Trump administration violated the Iran nuclear deal last month; the deal had removed economic sanctions on Iran in exchange for giving up its nuclear program.

“While this shouldn’t be considered a huge surprise, the confirmation was enough to send prices surging,” OANDA’s Innes said.

Currencies

The dollar index, which measures the greenback against a basket of currencies, was at 94.68 at 8:22 A.M. SGT, climbing from levels as low as 94.20 on Tuesday.

The 10-year U.S. Treasury yield was at 2.883 percent at 8:31 A.M. SGT after touching levels as high as 2.90 percent overnight. Bond prices move inversely to yields.

The dollar/yen was at 110.051 at 8:38 A.M. SGT after touching levels as low as 109.35 overnight, according to DZHI data.

The euro/dollar was at 1.1650 a 8:38 A.M. SGT, down from levels as high as 1.1721 overnight.

The Singapore dollar was largely steady with levels last Tuesday, with the dollar/sing at 1.3630 at 8:35 A.M. SGT, but that was after it traded in a 1.3587-1.3639 range on Tuesday.

 

World Cup

The World Cup is set to continue to deprive traders of sleep.

On Tuesday, Peru beat Australia 2-0; Peru had previously lost to Denmark and France.

Denmark and France battled to a 0-0 tie. Freshly popular Nigeria lost to Argentina 2-1. First-time World Cup team Iceland lost to Croatia 1-2.

Coming up later on Wednesday, dark horse Mexico will go up against Sweden. Wobbling favorite Germany plays South Korea. Switzerland will compete with Costa Rica, and another teetering favorite, Brazil, will play Serbia.