Singapore market trends Tuesday: Nikkei opens higher, trade war jitters persist

Singapore CBD skylineSingapore CBD skyline

Singapore shares may remain mired on Tuesday amid a steady drumbeat of news that the Trump administration remains intent on pursuing a trade war; that may be exacerbated by bleary traders amid continued late-night World Cup action.

Singapore stocks to watch Tuesday: Keppel, Sembcorp, ComfortDelGro, Kimly, Spackman

On Monday, the Dow Jones Industrial Average edged up 0.15 percent, the S&P 500 rose 0.31 percent and the Nasdaq gained 0.76 percent. Futures for the three indexes were nearly flat early Tuesday.

“The major indexes struggled to find traction as the ongoing slowdown in global growth data, escalating trade war rhetoric, and a nervy Brexit meeting around the corner continued to weigh on investor sentiment,” Stephen Innes, head of Asia Pacific trading at OANDA, said in a note on Tuesday.

The Straits Times Index ended Monday down 0.91 percent at 3238.94; July futures for the index were at 3230 on Monday, while August futres were at 3197.

Japan’s Nikkei 225 index opened higher on Tuesday, trading up 0.26 percent at 8:20 A.M. SGT.

Trade war

The usually Republican-supporting U.S. Chamber of Commerce has launched a campaign to oppose U.S. President Trump’s trade war; it issued a report detailing the specific harm each U.S. state could suffer as trading partners retaliate for the administration’s protectionist measures.

U.S. Commerce Secretary Wilbur Ross told CNBC on Monday that it didn’t matter how much the stock market fell, the Trump administration wouldn’t change its combative approach to global trade.

The U.S. Commerce Department on Monday urged the Federal Communications Commission to reject China Mobile’s efforts to obtain a license to operate in the U.S., citing security concerns. That will likely block the Chinese company’s efforts.

Bloomberg reported on Monday that Trump’s trade war could hurt Americans’ retirement savings, as S&P 500 index funds are three of the top 10 holdings in 401(k) accounts; S&P 500 companies get around 40 percent of their sales, and an estimated 60 percent of sales growth, from overseas, Bloomberg reported, citing data from John Butters, senior earnings analyst at FactSet.

In news of the bizarre, White House spokesperson Sarah Sanders took aim at staunch ally Canada: “We’ve been very nice to Canada for many years, and they’ve taken advantage of that.” She also took umbrage at Canada’s imposition of retaliatory tariffs against the U.S.’s measures, saying that would only hurt American workers.

Currencies

The dollar index, which measures the greenback against a basket of currencies, was at 94.85 at 8:17 A.M. SGT after climbing as high as 95.11 overnight.

The 10-year U.S. Treasury yield was at 2.871 percent at 8:26 A.M. SGT, up from levels as low as 2.829 percent overnight. Bond prices move inversely to yields.

The dollar/yen was at 110.94 at 8:32 A.M. SGT, after trading as high as 111.063 overnight, according to DZHI data.

The euro/dollar was at 1.1640 at 8:33 A.M. SGT, after trading as high as 1.1691 overnight.

The Singapore dollar remained on a downtrend, with the dollar/sing at 1.3694 at 8:35 A.M. SGT, after trading as high as 1.3716 overnight; that compares with levels as low as 1.3302 in June.

JPMorgan said that it didn’t expect recent U.S. dollar strength to persist.

“The dollar is at a crossroads over whether U.S. exceptionalism persists or strong global synchronized growth resumes—we still expect the latter and for the dollar to retrace lower,” JPMorgan said in a note last week. “In our central scenario, the world reverts to a phase of more
synchronized growth and the dollar sheds a couple of percentage points in a return to a low-vol grind with some respite in the process for beleaguered high-beta currencies.”

It forecast the euro/dollar would rise to trade at 1.20 at year end.

Oil

Nymex WTI crude oil futures for August were up 0.24 percent at US$74.12 a barrel at 8:20 A.M. SGT, while ICE Brent crude oil futures for September were up 0.36 percent at US$77.58, according to Bloomberg data.

World Cup

World Cup action overnight likely means traders will be sleepy on Tuesday.

Overnight, Belgium knocked Japan out of the running with a hard-fought 3-2 win. Favorite Brazil also beat dark horse Mexico, which upset a host of forecasts by an early win over favorite and defending champion German; that score was 2-0.

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