Singapore market trends Monday: Shares may wobble as Trump tariff call eyed

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Singapore’s shares may wobble on Monday as traders await the cliff-hanger decision on whether U.S. President Trump will escalate his trade war by imposing fresh tariffs on more imports from China.

“The trade war is back and investors don’t like it.” Kathy Lien, managing director of foreign-exchange strategy for BK Asset Management said in a note late on Friday, U.S. time. “Stocks extended their slide [Friday] and unless the president retracts his threats, further losses are likely which means more risk aversion and losses for the major currencies.”

The Trump administration reportedly could impose its proposed 25 percent tariff on US$200 billion of Chinese imports in the coming days. Trump has since threatened to impose tariffs on all imports from China, with the mainland set to swiftly retaliate.

That comes as Bob Woodward, of the famed Woodward and Bernstein pair who broke the Watergate scandal and unseated President Nixon, published a book about the Trump administration, titled, “Fear.” One anecdote in the book is that Trump, while editing a then-upcoming speech after the G20 summit, scribbled his thoughts, writing “TRADE IS BAD.” The note was reportedly reproduced in the book, which noted that while Trump never spoke the words, they appeared to be the “truest expression” of his protectionism and isolationism.

Both Japan’s Nikkei 225 index and South Korea’s Kospi were nearly flat in early trade.

The Straits Times Index ended Friday down 0.42 percent at 3134.39; index futures for September were at 3133 on Friday, while October futures were at 3137.

Hong Kong’s Hang Seng Index was flat on Friday at 26,973.41 at Friday’s close, while the mainland’s CSI 300 was up 0.45 percent at 3277.64.

The Dow Jones Industrial Average ended down 0.31 percent at 25,916.54 on Friday, while the Nasdaq was off 0.26 percent at 7902.54 and the S&P 500 shed 0.22 percent to 2871.68. Futures for the three indexes were slightly higher in early trade.

Currencies

The U.S. dollar index, which measures the greenback against a basket of currencies, was at 95.37, compared with levels as low as 94.90 on Friday, according to ICE futures data.

The 10-year U.S. Treasury note yield was at 2.945 percent at 8:14 A.M. SGT, compared with levels as low as 2.873 percent on Friday, according to Tullett Prebon data.

“The highest year-on-year print for U.S. Average Hourly Wages since 2009 contributed to the stronger close on the [dollar index] Friday,” Stephen Innes, head of Asia Pacific trading at OANDA said in note on Saturday. But he noted the U.S. dollar’s rally fell short of threatening key levels, which suggested the uncertainty over the trade war as well as weekend position squaring may have led traders to hold back. “The follow-through activity on  Monday in Asia could be telling.”

The euro/dollar was at 1.1558 at 8:16 A.M. SGT after trading in a 1.1549 to 1.1649 range on Friday, according to DZHI data.

Yen moves

The dollar/yen was at 110.99 at 8:17 A.M. SGT after trading in a 110.36 to 111.248 range on Friday, according to DZHI data.

BK Asset Management’s Lien said that the U.S. nonfarm payrolls report “guaranteed” a Federal Reserve rate hike later this month.

“The greenback should extend its gains versus the euro, Australian dollar and other major currencies, but the outlook for dollar/yen is tricky. The dollar/yen dropped as safe haven carry flows returned home after President Trump hinted that Japan could be the target for their next trade fight,” she said.

The dollar/yuan ended Friday at 6.8418 after trading ina 6.8215 to 6.8479 range, according to DZHI data.

The Singapore dollar weakened against the U.S. dollar. The dollar/Sing was at 1.3790 at 8:19 A.M. SGT after trading in a 1.3735 to 1.3795 range on Friday, according to DZHI data.

Oil

Nymex WTI crude oil futures for October were up 0.55 percent at US$68.12 at 6:43 A.M. SGT, while ICE Brent crude futures for November were up 0.59 percent at US$77.28 at 6:36 A.M. SGT, according to Bloomberg data.

Read more: Crude oil seen weaker on demand concerns

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