Singapore market trends Wednesday: US trade war jitters set to fester

Singapore subway MRT escalator at One North; taken August 2018.Singapore MRT escalator at One North.

Singapore’s shares will start trade on Wednesday with a lack of cues, as a Wall Street rally on Tuesday hasn’t been echoed in early Asia market openings amid festering concerns over the U.S. trade war.

“The buoyant U.S. markets continue to benefit from the run of very robust U.S. economy and should continue to do so as the U.S. economy is firing on all cylinders,” Stephen Innes, head of Asia Pacific trading at OANDA, said in a note on Wednesday.

But he added, “South Asia market risk is an entirely different kettle of fish, and ‘when in doubt stay out’ as there are few clear-cut risk decisions on the back of the looming China tariffs, tech sector woes and likely slowdown in China. One look at the Hang Seng price action should be enough to scare even the most prominent contrarians.”

A lack of fresh news on the U.S. trade war with China may calm some jitters in Asia’s markets.

Based on reports last week, the Trump administration was expected impose its proposed tariffs of as much as 25 percent on US$200 billion of Chinese imports in the coming days. Since then, Trump has threatened to impose tariffs on all imports from China, with the mainland set to swiftly retaliate.

But so far, there’s been no word on how the U.S. will proceed.

Asia opens generally flat

In early trade on Wednesday, South Korea’s Kospi was up 0.03 percent, while the Nikkei 225 index was off 0.22 percent.

The Straits Times Index was down 0.35 percent at 3109.91 at Tuesday’s close; September futures for the index were at 3103 on Tuesday, while October futures were at 3107.

Read more: Singapore stocks to watch Wednesday: ThaiBev, CapitaLand, Swiber, Hi-P, Singapore Exchange

Hong Kong’s Hang Seng Index lost 0.72 percent to 24,422.551 by Tuesday’s close, while China’s CSI 300 was down 0.18 percent at 3224.212.

The Dow Jones Industrial Average was up 0.44 percent at 25,971.06 at Tuesday’s close, the Nasdaq composite added 0.61 percent to 7972.474, getting a fillip from a rise in Apple shares ahead of its launch of new iPhone models. The S&P 500 gained 0.37 percent to 2887.89.

Some analysts pointed to clouds on the horizon for the U.S. economy. July Job Openings and Labor Turnover Survey, or JOLTS, data released on Tuesday rose to the highest level since December 2001, when the data series began.

“No workers, no growth, its that simple. This isn’t something for the Trump administration to brag about, this is not a sign of opportunity, this is something for Washington to worry about,” Chris Rupkey, chief financial economist at MUFG, said in a note on Tuesday U.S. time.

“This may well be the first time in the country’s history that growth slams to a halt because we cannot find people to work,” he added. “Many elements of the administration’s immigration policies that restricts the number of people coming in may actually backfire if companies cannot get the help they need.”

Currencies

The U.S. dollar index was at 95.11 at 7:44 A.M. SGT after trading as high as 95.34 and as low as 94.89 on Tuesday, according to ICE futures data.

The 10-year U.S. Treasury note yield was at 2.981 percent at 7:55 A.M. SGT, around Tuesday’s high, rising from as low as 2.936 percent early in Tuesday’s session, according to Tullett Prebon data.

The euro/dollar was at 1.1595 at 8:00 A.M. SGT after trading in a 1.1564 to 1.1644 range on Tuesday, according to DZHI data.

The dollar/yen was at 111.611 at 8:01 A.M.. SGT after trading in a 111.04 to 111.642 range on Tuesday and off a low of 110.36 touched last week, according to DZHI data.

The dollar/yuan closed Tuesday at 6.8703 after trading in a 6.8555 to 6.8764 range during the session, according to DZHI data.

The Singapore dollar steadied, with the dollar/Sing at 1.3764 at 8:06 A.M. SGT after trading in a 1.3741 to 1.3809 range on Tuesday, according to DZHI data.

Oil

Nymex WTI crude oil futures for October were up 0.84 percent at US$69.83 a barrel at 7:22 A.M. SGT, while ICE Brent crude oil futures for November were up 2.18 percent at US$79.06 a barrel at 5:59 A.M. SGT, according to Bloomberg data.

Read more: Crude oil gains ahead of Asia open on surprise API draw

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