Singapore market trends Friday: China-US trade talk hopes may bolster shares

Singapore’s Marina Bay SandsSingapore’s Marina Bay Sands

Singapore shares may get a fillip on Friday from Wall Street’s rally on hopes that the U.S. trade war with China might come to a resolution, but traders may be leery of holding positions over the weekend amid a inconsistent Trump administration policy front.

Optimism fueled Wall Street after reports emerged that the U.S. and China would hold lower-level talks this month on the Trump administration’s escalating trade war. This would mark the first talks in two months even as the two countries have exchanged retaliatory tariffs.

“It’s hard to get too excited about the ‘low level’ trade talks taking place next week,” Chris Weston, head of research at Pepperstone, said in a note on Friday.

“As we have seen from various market moves overnight, some have taking this meeting as a cue to add risk to portfolios, but market participants should question this stance and ask whether we are really going to get a breakthrough in the trade tensions from these players? It certainly seems unlikely, and the U.S. are still highly likely to place $200 billion of tariffs on Chinese imports in September and we are then back to square one,” he added.

To be sure, White House economic adviser and former CNBC commentator Larry Kudlow told reporters he was unsure whether talks would succeed, but that “talking is always better than not talking.”

 

 

In the U.S. on Thursday, the Dow Jones Industrial Average ended up 1.58 percent at 25,558.73, the Nasdaq rose 0.42 percent to 7806.524 and the S&P 500 tacked on 0.79 percent to 2840.69. Futures for the three indexes were essentially flat early Friday.

The Straits Times Index ended Thursday down 0.69 percent at 3211.93; on Thursday, August futures for the index were at 3212, while September futures were at 3213.

Japan’s Nikkei 225 was up 0.38 percent in early trade on Friday.

Currencies

The U.S. dollar index was at 96.66 at 8:16 A.M. SGT, according to ICE futures data, broadly steady with levels on Thursday.

The 10-year U.S. Treasury bond yield was at 2.869 percent at 8:26 A.M. SGT, after trading as high as 2.890 percent overnight. Bond prices move inversely to yields.

The euro/dollar was at 1.1371 at 8:29 A.M. SGT after trading in a 1.1334 to 1.1409 range overnight, according to DZHI data.

The dollar/yen was at 110.878 at 8:30 A.M. SGT after trading in a 110.44 to 111.124 range overnight, according to DZHI data.

Yuan strengthens

The dollar/yuan ended at 6.8791 on Thursday after trading as high as 6.9329 during the session, according to DZHI data.

“We continue to watch moves in the CNY and CNH after Chinese authorities put in measures to affect liquidity in the offshore (CNH) market, which was again aimed at those holding CNH short positions and again making shorting the yuan more expensive,” Weston noted. “This was characterised by a 500 basis point spike (the largest one-day move since January 2016) in 12-month CNH funding.”

The Singapore dollar was a tad stronger, with the dollar/Sing at 1.3756 at 8:32 A.M. SGT, after trading as high as 1.3819 earlier in the week.

Turkey’s lira

Turkey’s lira continued to regain some recent losses, with the dollar/lira at 5.8350 at 8:34 A.M. SGT, after the pair traded as high as 7.2149 earlier in the week amid a currency crisis that has dented other emerging market currencies.

“Actions taken by the Turkish Banking Regulation and Supervision Agency to limit short-selling the Lira through swaps seems to have worked well, at least in the short run,” Hussein Sayed, chief market strategist at FXTM, said in a note on Thursday. “Also supporting the Lira was the announcement that Qatar has offered $15 billion in direct investment. However, such measures may only provide short-term relief and policy makers need to address the longer-term challenges that will face the country.”

Oil

Nymex WTI crude oil futures for September were down 0.18 percent at US$65.34 a barrel at 8:10 A.M. SGT, while ICE Brent crude oil futures for October were down 0.20 percent at US$71.29 a barrel, according to Bloomberg data.

Read more: US crude oil points lower ahead of Asia open, but Iran-US tensions eyed

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