Singapore market trends Monday: Fed’s Powell reassures markets, NAFTA deal eyed

Singapore street sceneSingapore street scene

Singapore’s shares may get a sentiment boost on Monday from gains on Wall Street amid expectations that U.S. interest rate rises wouldn’t be too onerous and signs that some global trade tensions might be easing.

At the Jackson Hole conclave of central bankers last week, U.S. Federal Reserve chief Jerome Powell appeared to reassure markets that the central bank won’t tighten too much, too quickly. That helped send stocks higher and weighed on the U.S. dollar.

“Powell confirmed that further gradual tightening will be needed but investors were not impressed and instead focused on his comment that there’s no sign of inflation accelerating and no elevated risk of it overheating,” Kathy Lien, managing director of foreign-exchange strategy at BK Asset Management, said in a note on Friday, U.S. time.

Markets may also be reassured by reports that Mexico and the U.S. may be nearing a deal on the NAFTA trade pact, although Reuters reported that Mexico’s Economy Minister Ildefonso Guajardo said on Sunday victory couldn’t be declared yet.

Japan’s Nikkei 225 index was up 0.62 percent in early trade Monday.

The Dow Jones Industrial Index ended Friday up 0.52 percent at 25,790.35, the Nasdaq rose 0.86 percent at 7945.975 and the S&P 500 added 0.62 percent to 2874.69. Futures for the three indexes were higher in early trade on Monday.

The Straits Times Index ended Friday down 1.135 percent at 3213.00; August futures for the index were at 3213 on Friday, while September futures were at 3215.

Hong Kong’s Hang Seng Index ended Friday 0.43 percent lower at 27,671.869, while China’s CSI 300 index was up 0.16 percent at 3325.335.

Currencies

The U.S. dollar index was at 95.10 at 7:41 A.M. SGT, off levels as high as 95.53 on Friday and 96.73 in mid-August, according to ICE futures data.

The U.S. 10-year Treasury bond yield was at 2.816 percent at 4:58 P.M. U.S. ET on Friday, off levels as high as 2.847 percent on Friday. Bond yields move inversely to prices.

Euro strengthens

The euro/dollar was at 1.1646 at 7:59 A.M. SGT, breaking out of Friday’s range of 1.1533 to 1.1640, and well off the low of 1.13 touched earlier this month, according to DZHI data, as worries over Turkey’s currency crisis spurred market jitters.

Markets didn’t appear overly concerned that an Italian newspaper reported, citing three high-level Italian officials, that U.S. President Trump said the U.S. was willing to buy Italian government bonds, with analysts saying that this was likely aimed an encouraging Italy to leave the EU.

“Trump has made it clear he would welcome Italy leaving the EU and offering to buy their bonds would be encouraging to any Italians who embrace that idea. That said, Italy isn’t leaving the EU or EMU (European Monetary Union) anytime soon, if at all,” Chris Weston, head of research at Pepperstone Group, said in a note on Monday.

“Trump needs to understand that if markets had Italy leaving the EU/EMU if their sights then the S&P 500 would see a sizeable drawdown and the U.S. economy would head towards a fairly protracted recession,” he said.

The dollar/yen was at 111.284 at 8:01 A.M. SGT, compared with a 111.07 to 111.487 range on Friday, off last week’s low of 109.74, according to DZHI data.

The Singapore dollar remained on a strengthening path, with the dollar/Sing at 1.3645 at 8:04 A.M. SGT, compared with Friday’s range of 1.3642 to 1.3743 and 1.3819 touched earlier this month, according to data from DZHI.

The dollar/yuan ended Friday at 6.8029, compared with its high earlier this month at 6.9347, according to DZHI data. On Friday, China reportedly took steps to support its currency as the U.S. trade war could weigh on the yuan.

Turkey’s lira was generally steady against the dollar, with the dollar/lira at 5.9794 at 8:06 A.M. SGT, well off the high of 7.2149 touched earlier this month, according to DZHI data.

Oil

Nymex WTI crude oil futures for October were down 0.12 percent at US$68.64 a barrel at 7:13 A.M. SGT, while ICE Brent crude futures for October were down 0.22 percent at US$75.65 a barrel at 7:21 A.M. SGT, according to Bloomberg data.

Read more: Crude futures point lower for Asia

This article was originally published on Monday, 27 August 2018 at 8:43 A.M. SGT; it has since been updated to add the Nikkei 225 index movement.

Get Shenton Wire headlines in your inbox