Singapore market trends Friday: US trade war threats may spur market jitters

Singapore shares appear set on Friday to start the last trading session of August on a negative note amid threats from U.S. President Trump to continue and potentially escalate his trade war and efforts to poke holes in the rules-based global trade regime.

In an interview with Bloomberg, Trump threatened to pull the U.S. out of the World Trade Organization if it didn’t “shape up,” and he called it “the single worst trade deal ever made.” He has also referred to other trade deals as the worst-ever deals.

To be sure, Trump has a long history of bombastic, but unfulfilled threats on trade and other matters.

“One of the main reasons for the pullback in equities and currencies is end of the month profit taking but President Trump’s threat to withdraw from the WTO also did not help,” Kathy Lien, managing director of foreign-exchange strategy at BK Asset Management, said in a note on Thursday, U.S. time.

Additionally, markets were jittery after Bloomberg reported, citing six people familiar with the matter, that Trump wants to proceed with tariffs on US$200 billion of Chinese imports as soon as the public comment period completes next week.

“Equity has predictably have taken it on the chin as the market has that distinct taste of risk off. But this reaction is likely magnified by weekend profit taking and the emerging market tumult that continues to weigh on overall sentiment,” Stephen Innes, head of Asia-Pacific trading at OANDA, said in a note on Friday.

Japan’s Nikkei 225 index was down 0.44 percent in early trade.

The Straits Times Index ended down 0.56 percent at 3225.72 on Thursday; September futures for the index were at 3226 on Thursday, while October futures were at 3230.

Hong Kong’s Hang Seng Index ended Thursday down 0.89 percent at 28,164.051, while China’s CSI 300 was down 1.05 percent at 3351.094.

The Dow Jones Industrial Average ended down 0.53 percent at 25,986.92, the Nasdaq shed 0.26 percent to 8088.36 and the S&P 500 fell 0.44 percent to 2901.13.

Currencies

The U.S. dollar index, which measures the buck against a basket of currencies, was at 94.73 at 8:10 A.M. SGT, after trading as low as 94.48 and as high as 94.87 on Thursday, according to ICE futures data.

The 10-year U.S. Treasury bond yield was at 2.856 percent at 8:21 A.M. SGT after rising as high as 2.888 percent on Thursday, according to Tullet Prebon data.

Euro drops

The euro/dollar dropped and was at 1.1665 at 8:23 A.M. SGT after trading in a 1.1639 to 1.1718 range on Thursday, according to DZHI data.

“Italy is the biggest problem for the euro right now and Fitch is scheduled to update their rating for Italy on Friday. Based on comments published in a local newspaper, the chance of some type of negative change (either in their outlook or the rating) is very likely,” Lien said.

“If Fitch downgrades Italy, EUR/USD could hit 1.1550 on the fear that S&P and Moody’s will do the same when they update their ratings in October,” she added.

The dollar/yen was at 110.945 at 8:24 A.M. SGT after trading in a 110.93 to 111.756 range on Thursday, according to DZHI data.

The dollar/yuan was at 6.8420 at Thursday’s close after trading in a 6.8185 to 6.8420 range on Thursday, according to DZHI data.

The Singapore dollar weakened; the dollar/Sing was at 1.3671 at 8:26 A.M. SGT, after trading in a 1.3637 to 1.3686 range on Thursday, according to DZHI data.

Oil

Nymex WTI crude oil futures for October were down 0.23 percent at US$70.09 a barrel at 8:02 A.M. SGT, while ICE Brent crude oil futures for October were down 0.31 percent at US$77.53 at 8:00 A.M. SGT, according to Bloomberg data.

Read more: Crude oil points flat to weaker ahead of Asian open

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