Singapore market trends Tuesday: Trade war tensions show signs of easing

Singapore street scene; taken August 2018.Singapore street scene; taken August 2018.

Singapore’s shares may get a boost from signs the U.S. trade war could enter a cease fire, after Wall Street got a boost after the U.S. and Mexico reached an agreement to modify the NAFTA trade deal on Monday.

“Investors are hoping that Mexico’s deal represents a more conciliatory approach by Trump that could pave the way for similar agreements with other countries. Rising global trade tensions has been one of the greatest sources of uncertainty for the financial markets this year and it sparked a risk off tone,” Kathy Lien, managing director of foreign-exchange strategy for BK Asset Management, said in a note on Monday, U.S. time.

Japan’s Nikkei 225 index was up 0.72 percent in early trade.

The Straits Times Index ended Monday up 0.39 percent at 3225.62; August futures for the index were at 3226 on Monday, while September futures were at 3227.

Hong Kong’s Hang Seng Index ended Monday up 2.17 percent at 28,271.27, while China’s CSI 300 rose 2.44 percent to 3406.573.

On Wall Street, the Dow Jones Industrial Average ended Monday up 1.01 percent at 26,049.64, the Nasdaq rose 0.91 percent to 8017.895 and the S&P 500 tacked on 0.77 percent to 2896.74. Futures for the three indexes had their noses in the green.

“The bulls have firm control here, as a market breaking out of prior all-time highs is as bullish as it gets, especially if high yield credit is performing fairly well too. Sure, the bears can focus on valuation and fairly concentrated breadth, but the S&P 500 on 16.8 times consensus forward earnings is lofty, but there is scope for the market to push this 18 times before real vulnerabilities kick in. So I am happy to remain long here,” Chris Weston, head of research at Pepperstone, said in a note on Tuesday.

Currencies

The U.S. dollar index, which measures the greenback against a basket of currencies, was at 94.77 at 7:51 A.M. SGT, off as high as 95.28 overnight, according to ICE futures data.

The 10-year U.S. Treasury bond yield was at 2.813 percent at 5:00 P.M. SGT after rising as high as 2.847 percent overnight, according to Tullett Prebon data. Bond yields move inversely to prices.

“Now that Mexico secured a bilateral trade deal, investors are unwinding their long dollar trades in the hopes that more countries will follow. The dollar index dropped to three-week lows today and further losses are likely,” BK Asset Management’s Lien said. “If Canada manages to secure a preliminary trade agreement this week, all of the major currencies will extend higher and the U.S. dollar will retreat further.”

Euro climbs

The euro/dollar was at 1.1683 at 8:05 A.M. SGT after trading in a 1.1593 to 1.1694 range on Monday, coming well off its low of around 1.13 earlier this month, according to data from DZHI.

“The best performing currency today was the euro. Not only did it benefit from the overall improvement in risk appetite but it was also supported by stronger business confidence. The German IFO index rose for the first time in nine months,” Lien said. “Expectations for exports were particularly strong which is a sign that concerns about trade tensions are easing. This means that more than short covering could fuel the rally in EUR/USD going forward.”

The dollar/yen was at 111.185 at 8:06 A.M. SGT, after trading in a 110.90 to 111.359 range on Monday, according to DZHI data.

The Singapore dollar remained on a strengthening bent, with the dollar/Sing at 1.3620 at 8:07 A.M. SGT, after trading in a 1.3614 to 1.3671 range on Monday, according to DZHI data.

The dollar/yuan ended Monday at 6.8144 after trading in a 6.8020 to 6.8253 range on Monday, according to DZHI data.

The Turkish lira weakened slightly. The dollar/lira was at 6.1621 at 8:08 A.M. SGT, after trading in a 5.9649 to 6.2975 range on Monday, according to DZHI data.

Oil

Nymex WTI crude oil futures for October were up 0.10 percent at US$68.94 a barrel at 7:44 A.M. SGT, while ICE Brent crude oil futures for October were up 0.51 percent at US$76.21 at 5:59 A.M. SGT, according to Bloomberg data.

Read more: Crude oil higher in early Asia trading ahead of API estimates

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