Singapore market trends Monday: US trade war fears, emerging market currency selloffs may weigh

Singapore container portSingapore’s container port

Singapore’s shares may face headwinds on Monday, amid concerns the U.S. may soon escalate its trade war with additional tariffs on imports from China and amid a selloff in some emerging market currencies.

Read more: Singapore stocks to watch Monday: Yangzijiang, ST Engineering, AsiaPhos, Stamford Land, Sembcorp

“Global risk assets should remain under duress due to an ongoing potent mix of emerging markets spillover amidst concerns that President Trump moves forward this week with the next round of tariffs directed at China,” Stephen Innes, head of Asia Pacific trading at OANDA, said in a note on Monday. He added that he expected China’s markets to trade “on their back foot” amid the tariff concerns.

Trump may impose fresh tariffs

Bloomberg News reported, citing six people familiar with the matter, that U.S. President Trump wants to impose tariffs on US$200 billion of Chinese imports as soon as the public comment period ends this week. When asked to confirm the plan in an interview with Bloomberg News on Thursday, Trump said it was “not totally wrong,” Bloomberg reported.

Concerns over the U.S. trade war, and particularly Trump’s threat to pull the U.S. out of the World Trade Organization, have unsettled markets, and played a role in discussions at the ASEAN economic ministers’ meeting last week.

Last week’s drop in Indonesia’s rupiah to levels not seen since the Asian Financial Crisis in the late 1990s amid an emerging market selloff sparked by concerns over Argentina and Turkey may also weigh on sentiment on Monday.

Japan’s Nikkei 225 index was down 0.38 percent in early trade on Monday.

The Straits Times Index ended Friday down 0.38 percent at 3213.48; September futures for the index were at 3211 on Friday, while October futures were at 3215.

Hong Kong’s Hang Seng Index ended Friday down 0.98 percent at 27,888.551, while China’s CSI 300 was down 0.50 percent at 3334.504.

On Friday, the Dow Jones Industrial Average ended down 0.09 percent at 25,964.82, the Nasdaq was up 0.26 percent at 8109.537 and the S&P 500 squeaked up 0.013 percent, or 0.39 point, to 2901.52. Futures for the three indexes were slightly higher early Monday, Asia hours, but with U.S. markets closed for the U.S. Labor Day holiday, they may provide traders no clear signal.

“Given the Labor Day holiday weekend effect, position squaring and profit-taking played a significant roll in Friday’s price action as traders moved into risk reduction mode while positioning the U.S. dollar as go-to primary haven currency hedge,” Innes said.

Currencies

The U.S. dollar index, which measures the greenback against a basket of currencies, was at 95.19 at 7:51 A.M. SGT after touching levels as low as 94.57 on Friday, according to ICE futures data.

The 10-year U.S. Treasury bond yield was at 2.86 percent at 5:08 P.M. ET on Friday after touching levels as low as 2.832 percent in the Friday session, according to Tullett Prebon data.

The euro/dollar was at 1.1598 at 8:08 A.M. SGT after trading as high as 1.1733 last week and in a 1.1583 to 1.1690 range on Friday, according to DZHI data.

The dollar/yen was at 111.104 at 8:10 A.M. SGT, after trading in a 110.66 to 111.135 range on Friday, according to DZHI data.

The dollar/yuan ended Friday at 6.8299 after trading in a 6.8214 to 6.8470 range, according to DZHI data.

The Singapore dollar continued to weaken against the U.S. dollar, with the dollar/Sing at 1.3727 at 8:10 A.M. SGT, after trading in a 1.3659 to 1.3730 range on Friday, according to DZHI data.

Oil

Nymex WTI crude oil futures for October were up 0.14 percent at US$69.90 at 7:28 A.M. SGT, while ICE Brent crude futures for November were up 0.09 percent at US$77.71 at 7:27 A.M., according to Bloomberg data.

Read more: Crude oil prices closed higher in August

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