Singapore market trends Monday: US-China trade talks reportedly canceled

Singapore’s Marina Bay SandsSingapore’s Marina Bay Sands

Singapore shares may stumble on Monday amid reports China-U.S. trade talks have been canceled and amid a lack of cues with both Japan and South Korean markets closed.

“While headlines over the weekend suggested that trade talks between both U.S. and China will be shelved until after the U.S. midterm elections, markets will not view this in too much of a negative light,” Stephen Innes, head of Asia Pacific trading at OANDA, said in a note on Monday. “It’s not so unexpected, and frankly, the U.S. administration would be just as happy to keep trade wars out of the headlines ahead of the politically charged midterms.”

The Wall Street Journal reported, citing sources, that China over the weekend canceled trade talks with the U.S.

Trump had escalated his trade war on China last week, with plans to impose 10 percent tariffs on US$200 billion worth of imports from China and warned that if China retaliates, he will impose further tariffs on another US$267 billion in imports, effectively all of China’s goods exports to the U.S. The tariffs will start on 24 September and will rise to 25 percent by the end of the year, Reuters reported, citing a senior administration official.

China then put retaliatory tariffs on US$60 billion of products imported from the U.S., with the measures also taking effect on 24 September.

Indexes

Japan’s markets are closed for the autumn equinox holiday; South Korea’s markets were closed for the Chuseok holiday.

The Straits Times Index ended Friday up 1.17 percent at 3217.68; September futures for the index were at 3216 on Friday, while October futures were at 3221.

Hong Kong’s Hang Seng Index was up 1.73 percent on Friday, ending at 27,953.58, while China’s CSI 300 index was up 3.03 percent at 3410.486.

The Dow Jones Industrial Average was up 0.32 percent at 26,743.5 on Friday, while the Nasdaq Composite shed 0.51 percent at 7986.955 and the S&P 500 shed 0.037 percent to 2929.67. Futures for the three indexes were lower on Monday.

Currencies

The U.S. dollar index, which measures the greenback against a basket of currencies, was at 94.21 at 8:17 A.M. SGT, after trading as low as 93.83 on Friday and as high as 94.28, according to ICE futures data.

The 10-year U.S. Treasury note yield was at 3.065 percent at 1:51 P.M. ET on Sunday after trading as high as 3.082 percent of Friday, according to Tullett Prebon data.

“The U.S. dollar could trade defensively ahead of this weeks FOMC as U.S. dollar bulls err on the side of caution. With two U.S. rates hikes priced into the balance 2018 and in the absence of inflation, it’s almost impossible for the Feds to bump up the 2019 curve,” Innes said. “So, the markets will end up focusing on shifts in the long-ball forecast into 2020, which is not the best or brightest of signals for currency traders who tend to view markets in much nearer time horizons.”

The euro/dollar was at 1.1750 at 8:29 A.M. SGT after trading in a 1.1731 to 1.1803 range on Friday, according to DZHI data.

The dollar/yen was at 112.595 at 8:30 A.M. SGT after trading in a 112.386 to 112.874 range on Friday, according to DZHI data.

The dollar/yuan ended Friday at 6.8570 after trading in a 6.8324 to 6.8592 range on Friday, according to DZHI data.

The pound sterling was fetching US$1.3082 at 8:31 A.M. SGT, after tumbling on Friday, when it traded in a 1.3277 to 1.3054 range, according to DZHI data.

“In one day, sterling lost all of the gains that it had built up during the week and this shows just how sensitive the currency is to Brexit news. At the start of the month, it appeared that a deal was close but the talks broke down when Prime Minister May said they were at an impasse this week,” Kathy Lien, managing director of FX strategy at BK Asset Management, said in a note on Friday.

“With no major U.K. economic reports on the calendar in the coming week, we expect further weakness in sterling,” it said.

Oil

Nymex WTI crude oil futures for November were up 1.12 percent at US$71.57 a barrel at 8:09 A.M. SGT, while ICE Brent crude oil futures for November were up 1.36 percent at US$79.87 a barrel, according to Bloomberg data.

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