Singapore market trends Thursday: Tech and emerging market selloffs set to weigh

Display at Haw Par Villa theme park in SingaporeDisplay at Haw Par Villa theme park in Singapore

Singapore shares face headwinds on Thursday, amid a tech selloff on Wall Street, a rout in emerging markets and continued concerns the U.S. will expand its trade war even as political chaos in the White House deepens.

“U.S .equity markets fell led by a by tech giants. Indeed, when CEO’s are forced to testify before Congress amid a move for tighter regulation of the tech industry, nothing good would ever come of that,” Stephen Innes, head of Asia Pacific trading at OANDA, said in a note on Thursday. “Investors did their best version of a cut and run while battening down the hatches as NAFTA negotiations and Section 301 China tariff negotiation timelines expire.”

Expectations that the Trump administration would move forward with tariffs on US$200 billion of Chinese imports may have gotten a fillip overnight after data showed the U.S. goods and services trade deficit rose in July from June, as imports from China rose.

Japan’s Hokkaido island was struck by a magnitude 6.7 quake early Thursday, with reports of a landslide and other damage.

Additionally, shares may face headwinds as the selloff in emerging markets has persisted, with Bloomberg reporting the downtrend may be the worst since the Global Financial Crisis in 2008.

Japan’s Nikkei 225 index was down 0.43 percent in early trade.

The Straits Times Index ended Wednesday down 1.69 percent at 3156.28; September futures for the index were at 3156 on Wednesday, while October futures were at 3160.

Hong Kong’s Hang Seng Index fell 2.61 percent on Wednesday to end at 27,243.85, while China’s CSI 300 lost 1.96 percent to 3298.141.

The Dow Jones Industrial Average ended Wednesday up 0.09 percent at 25,974.99, while the Nasdaq fell 1.19 percent to 7995.172 and the S&P 500 shed 0.28 percent to 2888.60. Futures for the three indexes were flat in early trade.

U.S. political chaos

In the U.S., the political climate grew even darker after Bob Woodward, one half of the Woodward and Bernstein duo who revealed the Watergate coverup, began releasing excepts of his soon-to-be-published book on the Trump presidency, showcasing not only previously highlighted chaos in the White House, but fresh narratives suggesting presidential incompetency.

U.S. President Trump took to Twitter to deny some of the accusations in the book, which he called “already discredited.”

In an Oval Office press conference, Trump added: “If you look back at Woodward’s past, he had the same problem with other presidents, he likes to get publicity, he sells some books.”

It was followed a day later by the New York Times publishing an anonymous Op-Ed from a senior Trump administration official who wrote “the president continues to act in a manner that is detrimental to the health of our republic.”

Currencies

The U.S. dollar index, which measures the greenback against a basket of currencies, was at 95.10 at 6:05 A.M. SGT, after trading as high as 95.62 on Wednesday, according to ICE futures data.

The 10-year U.S. Treasury note yield was at 2.903 percent at 7:40 A.M. SGT, broadly in line with levels since Tuesday, according to Tullett Prebon data.

The euro/dollar was at 1.1633 at 7:53 A.M. SGT after trading in a 1.1542 to 1.1640 range on Wednesday, according to DZHI data.

The pound/dollar was at 1.2922 at 8:28 A.M. SGT after trading in a broad 1.2784 to 1.2983 range on Wednesday, according to DZHI data.

The sharp moves in both currencies were due to reports that Germany and the U.K. would drop key Brexit demands, but a couple hours later, Germany said their position was unchanged, Kathy Lien, managing director of foreign-exchange strategy at BK Asset Management, said in a note late Wednesday U.S. time.

“The reason why sterling could extend its gains is because Brexit negotiations are ongoing and while the Irish border issue is a big one, between the recent comments from EU chief Brexit negotiator Barnier and today’s rumor, we may be getting closer to a Brexit deal,” she said. “The European Union is more willing to negotiate with the U.K. than in the past and headlines like the one today on Germany fosters hope for a breakthrough.”

She also noted a Brexit deal would ease uncertainty for German businesses working with U.K. companies, adding she thinks the euro could rally further due to a significant decline in Italian bond yields.

The dollar/yen was at 111.461 at 7:54 A.M. SGT after trading in a 111.333 to 111.758 range on Wednesday, according to DZHI data.

The dollar/yuan ended Wednesday at 6.8269, broadly in line with levels in trade so far this week, according to DZHI data.

The Singapore dollar steadied after a spike weaker on Wednesday; the dollar/Sing was at 1.3752 at 7:56 A.M. SGT, after trading in a 1.3742 to 1.3814 range, according to DZHI data.

Oil

Nymex WTI crude oil futures for October were down 0.09 percent at US$68.66 a barrel at 6:48 A.M. SGT, while ICE Brent crude futures for November were down 1.15 percent at US$77.27 a barrel at 5;53 A.M. SGT, according to Bloomberg data.

Read more: Crude prices point weaker in Asia on Thursday after API estimates

This article was originally published on Thursday, 6 September 2018 at 8:41 A.M. SGT; it has since been updated to include the early Nikkei 225 level. 

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