Singapore shares were set to face dampened sentiment on Tuesday, after political chaos over the Russia investigation in the U.S. weighed on Wall Street.
Fresh political chaos in the U.S. appears to have dampened sentiment, with conflicting reports throughout Monday on whether Deputy Attorney General Rod Rosenstein had resigned or been fired or was still on the job. He’s reportedly still on the job, but was set to meet with U.S. President Trump later this week.
Rosenstein’s departure would be significant as he is supervising special counsel Robert Mueller’s investigation into Russian interference in the 2016 election and whether the Trump campaign conspired with Russian operatives. An article in the October issue of the New Yorker has indicated that Russian activity was “decisive” in the election outcome. For his part, Trump has repeatedly called the investigation a “witch hunt,” but it appears to have caught a fair number of witches, with multiple convictions and guilty pleas.
Offsetting the political turmoil, the Trump administration reached a trade deal with South Korea, its first trade deal since Trump took office with a promise to quickly renegotiate trade pacts. While Trump hailed the agreement as a major accomplishment, analysts have said the deal contains few substantial changes, the New York Times reported. The agreement allows the U.S. to continue imposing tariffs on imports of South Korean trucks, but the country doesn’t make them and if it did, its automakers would likely use their U.S. plants instead.
Singapore’s Straits Times Index edged up just 0.05 percent to end Monday at 3219.16; September futures for the three indexes were at 3218 on Monday, while October futures were at 3222.
Hong Kong’s Hang Seng Index fell 1.63 percent to 27,499.391; China’s markets were closed on Monday, with China’s CSI 300 index ending Friday up 3.03 percent at 3410.486. Hong Kong’s markets will be closed on Tuesday for a holiday.
The Dow Jones Industrial Average ended Monday down 0.68 percent at 26,562.05, the Nasdaq nudged up 0.08 percent to 7993.248 and the S&P 500 shed 0.35 percent to 2919.37. Futures for the three indexes were nearly flat in early trade.
Japan’s Nikkei 225 index was down 0.19 percent in early trade.
On Monday, Japan’s markets were closed for the autumn equinox holiday, while South Korea’s markets were closed for the Chuseok holiday on both Monday and Tuesday.
The U.S. dollar index, which measures the greenback against a basket of currencies, was at 94.26 at 6:05 A.M. SGT, after trading as low as 93.88 and as high as 94.36 during Monday’s session, according to ICE futures data.
The dollar’s climb off lows was likely due to Fed watching, Kathy Lien, managing director of foreign-exchange strategy at BK Asset Management, said in a note late on Monday U.S. time.
“These moves had nothing to do with U.S. data because both the Chicago and Dallas Fed manufacturing reports fell short of expectations. However the prospect of a Federal Reserve rate hike this week could be helping the dollar,” she said.
But she pointed to some uncertainty over how the Fed meeting this week could play out.
“The Federal Reserve is widely expected to raise interest rates but it could be a dovish or hawkish hike. The outcome could have a lasting impact on all of the major currencies. At the same time however, since U.S. stocks hit record highs this quarter, portfolio rebalancing will be negative for the dollar,” Lien said.
The 10-year U.S. Treasury note yield was at 3.087 percent at 7:49 A.M. SGT, just shy of the Monday session high of around 3.089 percent and off the low of around 3.065 percent, according to Tullett Prebon data.
Euro rises on Draghi comments
The euro/dollar was at 1.1753 at 7:52 A.M. SGT, after trading in a 1.1722 to 1.1815 range on Monday, according to DZHI data.
The euro climbed earlier in Monday’s session after European Central Bank chief Mario Draghi said there was a “vigorous” pick up in inflation in the eurozone, Lien said.
“Although the pair receded from its highs on the back of U.S. dollar strength, the euro should outperform other major currencies on the back of the ECB’s brighter inflation outlook and stronger data,” she added.
The dollar/yen was at 112.776 at 7:53 A.M. SGT, after trading in a 112.265 to 112.838 range on Monday, according to DZHI data.
The dollar/yuan ended at 6.8558 after moving in a 6.8540 to 6.8570 range on Monday, according to DZHI data.
The Singapore dollar may have ceased climbing, at least temporarily; the dollar/Sing was at 1.3662 at 7:56 A.M. SGT, after trading in a 1.3632 to 1.3675 range on Monday, off Friday’s low of 1.3605, according to DZHI data.
Nymex WTI crude oil futures for November were up 0.21 percent at US$72.23 a barrel at 7:18 A.M. SGT, while ICE Brent crude futures for November were up 3.05 percent at US$81.20 a barrel at 5:57 A.M. SGT, according to Bloomberg data.