Singapore market trends Wednesday: NAFTA hopes may bolster sentiment

Singapore’s Marina Bay SandsSingapore’s Marina Bay Sands

Singapore shares may get an additional fillip on Wednesday from optimism that a deal on updating the NAFTA trade pact will soon be ironed out, suggesting a softening of the Trump administration’s pursuit of a trade war. Shares may also get a boost from positive consumer confidence data in the U.S.

Japan’s Nikkei 225 index was up 0.24 percent in early trade.

The Straits Times Index ended Tuesday up 0.68 percent at 3247.55; August futures were at 3248 on Tuesday, while September futures were at 3249.

Hong Kong’s Hang Seng Index ended Tuesday up 0.28 percent at 28,351.619, while China’s CSI 300 shed 0.19 percent to 3400.17.

On Wall Street, the Dow Jones Industrial Average ended up just 0.06 percent at 26,064.02, the Nasdaq added 0.15 percent at 8030.038 and the S&P 500 edged up 0.03 percent to 2897.52, a record closing high. Futures for the three indexes were slightly higher in early trade.

NAFTA deal ahead?

Optimism over the NAFTA trade talks came as Canada appeared set to rejoin talks after a break of several weeks, following news that the U.S. and Mexico had hammered out an agreement on updates to the trade pact. An agreement was expected possibly as soon as next week.

“The U.S.-Mexico agreement is very constructive for Canada and Canada’s leverage in the negotiations has arguably increased despite the rhetoric from the Trump administration,” Scotiabank said in a note on Tuesday. “One key is that the U.S. has effectively dropped its demand for an automatic expiration, or sunset clause.”

It added that auto provisions shouldn’t “fuss” Canada as the provision to have 40-45 percent of auto content produced by workers paid at least US$16 a hour wasn’t relevant as Ontario’s overall minimum wage was already at C$14 (US$10.83) an hour.

“Trump’s, Lighthizer’s and Kudlow’s threats to go with a bilateral U.S.-Mexico agreement that cuts out Canada do not appear to be credible,” Scotiabank said, noting that Congress hadn’t given the Trump administration authority for a bilateral deal.

Positive drivers in the U.S. included consumer confidence data hitting a nearly 18-year high, suggesting consumer spending will help bolster the economy.

“On a fundamental basis, the record-breaking moves in U.S. stocks will boost business and consumer confidence,” Kathy Lien, managing director of foreign-exchange strategy at BK Asset Management, said in a note on Tuesday U.S. time. “This positive attitude should translate into more spending especially after the confidence report showed more respondents preparing to make big ticket purchases (homes, cars, major appliances) over the next six months.”

Currencies

The U.S. dollar index, which measures the greenback against a basket of securities, was at 94.70 at 8:03 A.M. SGT after touching levels as low as 94.47 on Tuesday, according to ICE futures data.

The 10-year U.S. Treasury note yield was at 2.882 percent, up from levels as low as 2.846 percent on Tuesday, according to Tullett Prebon data.

Euro gains

The euro/dollar was at 1.1692 at 8:16 A.M. SGT after trading in a 1.1661 to 1.1733 range on Tuesday, according to DZHI data.

The gains in the common currency came despite Italy’s 10-year bond yields rising to four-year highs; bond yields move inversely to prices.

“Right now investors are looking at it as a localized problem as they’ve sold Italian bonds but not the euro,” Lien said, but she added, “the euro may not be able to escape falling if Italy’s credit rating is lowered.”

She said resistance for the euro/dollar was at 1.1733 to 1.1760.

The dollar/yen was at 111.257 at 8:17 A.M. SGT after trading in a 110.93 to 111.358 range on Tuesday, according to DZHI data.

The dollar/yuan ended Tuesday at 6.8018, fairly steady with Tuesday’s levels, according to DZHI data.

The dollar/Singapore dollar was at 1.3641 at 8:18 A.M. SGT, after trading in a 1.3601 to 1.3647 range on Tuesday, according to DZHI data.

Oil

Nymex WTI crude oil futures for October were up 0.03 percent at US$68.55 a barrel at 7:53 A.M. SGT, while ICE Brent crude oil futures for October were down 0.34 percent at Us$75.95 at 5:59 A.M. SGT, according to Bloomberg data.

Read more: Crude oil seen narrowly mixed in Asia

Get Shenton Wire headlines in your inbox