Singapore market trends Thursday: Stocks face toxic brew of Turkey, trade war, China jitters

Singapore container portSingapore’s container port

Singapore shares will face a tough audience on Thursday amid a toxic brew of Wall Street’s negative lead, concerns over Turkey, renewed trade war fears, disappointing earnings reports and jitters over China’s economy.

“This crisis sparked by the trade wars,” Chris Rupkey, chief financial economist at MUFG Union Bank, said in a note Wednesday U.S. time. “It’s not just Turkey, the biggest emerging market of them all is fueling the overall selloff in EM currencies,” he added, pointing to China.

He noted that the U.S. trade war is spurring a decline in the yuan.

“Weakening economies feed the currency selloff and a weakening currency has foreign investors running for the hills so it is a vicious downward cycle,” he said. “One thing’s for certain, if the world economy is going down it has President Trump’s name all over it,” Rupkey said.

“You can’t pull back from trade agreements without pulling back on investment and the free flow of capital between nations. Right now all the world’s money is coming back to the States wreaking havoc on emerging market economies across the globe,” he added.

Also set to weigh on sentiment, Tencent on Wednesday reported its first quarterly profit decline in nearly 13 years amid weak gaming revenue, with the Chinese tech giant saying it didn’t have any visibility on when it would get regulatory approval to start charging for its most popular video game amid a reported sector-wide freeze on new game approvals on the mainland, according to a Reuters report.

Stocks

Japan’s Nikkei 225 index was trading down 1.22 percent early on Thursday.

The Straits Times Index ended Wednesday down 0.27 percent at 3234.12; August futures for the index were at 3230 on Wednesday, while September futures were at 3234, according to SGX data.

In the U.S. on Wednesday, the Dow Jones Industrial Average fell 0.54 percent to 25,162.41, the Nasdaq shed 1.23 percent to 7774.188 and the S&P 500 lost 0.76 percent to 2818.37. Futures for the three indexes were nosing down in early Asia trade on Thursday.

Currencies

The Turkish lira recovered a bit from its recent plunge, with the dollar/lira at 6.0124 at 8:18 A.M., well off the high of 7.2149 touched earlier in the week and Wedensday’s high of 6.5796, according to DZHI data.

The U.S. dollar index, which measures the greenback against a basket of currencies, was at 96.74 at 8:09 A.M. SGT, after touching levels as high as 96.96 overnight, hovering around levels last seen in mid-2017, according to ICE futures data.

The 10-year U.S. Treasury bond yield was at 2.861 percent at 8:18 A.M. SGT, after dipping as low as 2.839 percent overnight; bond yields move inversely to prices.

The euro/dollar was at 1.1338 at 8:23 A.M. SGT, after trading in a 1.13 to 1.1355 range on Wednesday, according to DZHI data, dropping sharply from levels above 1.16 earlier this month as the Turkey currency crisis unfolded.

The dollar/yen was at 110.576 at 8:24 A.M. SGT, after trading in a 110.41 to 111.432 range overnight, according to DZHI data.

The Singapore dollar continued a weakening trend, with the dollar/Sing at 1.3802, but off its high of 1.3819 touched on Wednesday, according to DZHI data.

The dollar/yuan closed Wednesday at 6.9329 after starting the month around 6.80, according to DZHI data.

Oil

Nymex WTI Crude Oil futures for September were down 0.18 percent at US$64.89 a barrel at 8:02 A.M. SGT, while ICE Brent Crude futures for October were off 0.08 percent at US$70.70 a barrel, according to Bloomberg data.

That was after a sharp fall overnight following the release of data showing inventory builds in the U.S.

Read more: U.S. crude oil points lower for Asia after unexpected build in weekly inventories

Other commodities also took a hit, with economically sensitive copper extending recent losses amid a stronger U.S. dollar and global trade fears.