Singapore shares may play the Federal Reserve waiting game on Wednesday, with mildly negative cues from early trade in Japan’s market and from Wall Street on Tuesday.
The Federal Open Market Committee, or FOMC, will be meeting later Wednesday, with the market broadly expecting another 25 basis point rate hike to 2.0 percent to 2.25 percent. But the comments that accompany that decision will be closely watched.
“All is calm on the Western front, and it seems this will spill over into Asia,” Chris Weston, head of research at Pepperstone Group, said in a note on Wednesday.
“We focus on the FOMC, and it’s all anyone is going to be focused on today,” Weston added. “Some in the markets have expressed a view that the Fed could be more troubled by trade tensions. However, I see this theme perhaps getting a mention, but at this stage, there isn’t enough clarity for the central bank to have the insights to alter their forecasts. Expect this to get more focus though in the December meeting.”
But Weston noted that traders may be heading into this meeting expecting a “modest hawkish shift.”
On the U.S. trade war front, hopes for a deal on NAFTA have dimmed as U.S. Trade Representative Robert Lighthizer said the U.S. could proceed with a Mexico-only deal as an agreement with Canada appeared unlikely before a U.S.-imposed deadline of 30 November. The deadline was aimed at ensuring the deal with Mexico is signed with the outgoing president, rather than its incoming one.
But legally, analysts strongly doubt the Trump administration can legally turn NAFTA into a bilateral deal from a trilateral one without Congressional approval, which may be difficult to come by as the NAFTA deal is politically popular and damaging it would prove economically disruptive.
However, the famously ego-protective U.S. President Trump may dig in his heels, especially after his U.N. appearance was met with derisive laughter. After Trump boasted at the beginning of his speech that his two years in office had accomplished more than almost any other president, the gathering laughed at him.
Japan’s Nikkei 225 was down 0.29 percent in early trade. South Korea’s market was closed for a holiday.
Singapore’s Straits Times Index (STI) ended Tuesday up 0.526 percent at 3236.08; September futures were at 3235 on Tuesday, while October futures were at 3238 and November futures were at 3242.
Hong Kong’s market was closed on Tuesday; it closed Monday down 1.63 percent at 27,499.391. China’s CSI 300 was up just 0.05 percent at 5479.1 on Tuesday.
Indonesia’s IDX index was down 0.13 percent at 5874.30 on Tuesday.
The Dow Jones Industrial Average fell 0.26 percent to end at 26,492.21, the Nasdaq rose 0.18 percent at 8007.471 and the S&P 500 lost 0.13 percent to 2915.56. Futures for the three indexes were just a tad higher in early trade.
The U.S. dollar index was at 94.14 at 6:05 A.M. SGT after trading as low as 94.03 and as high as 94.32 on Tuesday, according to ICE futures data.
The 10-year U.S. Treasury note yield was at 3.095 percent at 5:01 A.M. SGT after trading as high as 3.115 percent on Tuesday, according to Tullett Prebon data.
The euro/dollar was at 1.1763 at 7:39 A.M. SGT after trading in a 1.1730 to 1.1792 range on Tuesday, according to DZHI data.
The dollar/yen was at 112.989 at 7:40 A.M. SGT after trading in a 112.71 to 112.982 range on Tuesday, with the pair rallying from as low as 110.36 earlier this month, according to DZHI data.
The dollar/yuan was at 6.8675 at Tuesday’s close, after trading in a 6.8558 to 6.8808 range, according to DZHI data.
The dollar/Singapore dollar was at 1.3661 at 7:45 A.M. SGT, after trading in a 1.3643 to 1.3667 range on Tuesday, according to DZHI data.
The dollar/Indonesian rupiah was at 14,915 at Tuesday’s close, after trading in a 14,860 to 14,915 range, according to DZHI data.
Nymex WTI crude oil futures for November were down 0.53 percent at US$71.90 a barrel at 6:55 A.M. SGT, while ICE Brent crude oil futures for November were up 0.83 percent at US$81.87 a barrel at 5:59 A.M. SGT, according to Bloomberg data.