Singapore market trends Monday: Trump calls EU a ‘foe,’ while earnings, Fed eyed

The skyline in Singapore’s central business district.The skyline in Singapore’s central business district.

Singapore’s shares will start trade on Monday with few clear cues as traders await U.S. earnings and China gross domestic product data. Developments from U.S. President Trump’s meeting with Russian President Vladimir Putin will also be awaited.

Japan’s market is closed for the Marine Day holiday.

The Dow Jones Industrial Average ended Friday up 0.38 percent, the S&P 500 edged up 0.11 percent and the Nasdaq inched up 0.03 percent; futures for the DJIA were higher in Friday trade, but for the other two indexes, they were nearly flat.

In the U.S., “accelerated emphasis upon the second-quarter earnings season, modest data risk, Fed Chair Powell’s second swing at providing
semi-annual testimony before Congress and the hype around Monday’s Trump-Putin summit will offer plenty of potential market volatility,” Scotiabank said in a note on Friday. “Sixty-one firms listed on the S&P 500 release earnings over the coming week. Twenty-seven of those will be financials.”

The Straits Times Index ended Friday up 0.23 percent at 3260.35; July futures for the index were at 3248 on Friday, while August futures were at 3216.

China’s Shanghai Composite ended Friday down 0.23 percent at 2831.18, while Hong Kong’s Hang Seng Index ended up 0.16 percent at 28,525.44.

Trade war and politics

In the lead up to U.S. President Trump’s meeting with Russian President Vladimir Putin, the U.S. leader said in a televised interview with U.S. news outlet CBS that he considered the European Union a “foe” over trade, and indeed, it was the first “foe” he mentioned in his list of foes. He had less harsh words for whether he considered Russia a foe and he said China wasn’t “bad,” merely “competitive.” Last week, Trump said he considered Russia a “competitor,” not an enemy.

Those comments followed Trump’s widely criticized performance at NATO last week, in which he accused Germany of being a “captive” of Russia and threatened to “go it alone” if the allies in the defense alliance didn’t increase their defense spending, although it was never specified what he expected them to spend the increased funding on.

That also followed U.K. Prime Minister Theresa May saying in a BBC interview that Trump had advised her to “sue” the European Union over Brexit; in the video, May appeared amused by this and indicated the suggestion wasn’t being taken seriously. It was unclear where Trump believed a case could be filed or on what grounds, but in recorded comments, Trump said this advice was a “tough” approach.

That was after the British tabloid the Sun published an interview with Trump in which he lambasted May’s approach to Brexit just as he was enjoying U.K. hospitality and then later declared that the taped interview was “fake news.”

Currencies

The dollar index, which measures the greenback against a basket of currencies, was at 94.76 at 8:14 A.M. SGT, according to ICE futures, off levels as high as 95.21 touched last week.

The 10-year U.S. Treasury note yield was at 2.831 percent at the close on Friday.

The euro/dollar was at 1.1679 at 8:32 A.M. SGT, off Friday’s low of 116.11, according to DZHI data.

The dollar/yuan was at 6.6899 on Friday, after trading in a 6.6295 to 6.7037 range; the Chinese currency has weakened recently amid concerns over the U.S. trade war.

The Singapore dollar was fairly steady, with the dollar/sing at 1.3650 at 8:35 A.M. SGT, after trading in a 1.3613 to 1.3689 range on Friday; that was well off the pair’s high earlier this month of 1.3745.

Japan’s yen

The dollar/yen was at 112.442 at 8:27 A.M. SGT, according to DZHI data, off levels as high as 112.80 on Friday, but above last week’s lows around 110.74, despite recent risk-off moves in the market.

Greg Gibbs, an analyst at AmpGFX Capital, said the weaker yen was consistent with the U.S.-Japan yield differential.

“Bank of Japan QE continues apace, while the Fed is now in QT. Real yields have widened significantly in favor of the U.S. dollar, especially if you consider rising wages in Japan. The yen may be evolving from a safe haven to a regional currency,” he said in a note on Friday. “Bank of Japan QE policy may also be reasserting a negative influence on the currency.”

Oil

Nymex WTI crude oil futures for August were down 0.39 percent at US$70.73 a barrel at 7:34 A.M. SGT, a bit above last week’s lows, while ICE Brent crude futures for September were down 0.31 percent at US$75.10, after trading as low as US$73.40 last week, according to Bloomberg data.

In a move that may affect supply ahead, Iran announced last week that Russia would invest US$50 billion in its oil and gas sectors, reportedly marking what may be the first major collaboration between the two countries on the sector. That also marks a Russia move to counter newly reimposed U.S. sanctions of the Middle Eastern country after the U.S. decided earlier this year to violate the Iran nuclear pact, which had removed sanctions in exchange for Iran suspending its nuclear program.

World Cup

The World Cup saw one of its most suspenseful finals of recent tournaments, but ultimately France beat Croatia 4-2.

The Washington Post reported this final had the most goals scored in a World Cup final in regulation time in more than 60 years.

In the re-match between Belgium and England, Belgium took the title for third place 2-0.

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