Singapore shares will face some mixed signals on Thursday, with negative leads from Japan and Wall Street even as some analysts viewed the Federal Reserve’s interest rate hike as somewhat dovish.
“The Fed’s rate hike should have driven Treasury yields higher especially after they said not much as changed since June, but the fact that it [didn’t] indicates that Chairman Powell failed to satisfy the bulls,” Kathy Lien, managing director of foreign-exchange strategy at BK Assset Management, said in a note late Wednesday U.S. time.
“According to Powell, if inflation surprises to the upside, they could move faster but if the economy slows they would probably cut rates,” she noted. “Investors were hoping for unambiguously hawkish comments from the Fed chair and while he had a lot of good things to say, the mere mention of the possibility of rate cuts capped the rally.”
The U.S. Federal Reserve raised its benchmark interest rate by 25 basis points to 2.0 percent to 2.25 percent on Wednesday, in a widely anticipated move. In its closely watched statement, the Fed removed the word “accomodative” and signaled it was still likely to hike rates in December and three more times next year.
On the U.S. trade war front, things took a step further into the bizarre, with U.S. President Trump claiming he was so unhappy with Canada over the NAFTA negotiations that he rejected a request from Canadian Prime Minister Justin Trudeau for a one-to-one meeting. Canada denied any such request was made.
Japan’s Nikkei 225 index was down 0.36 percent in early trade on Thursday, while South Korea’s Kospi reopened after a long holiday, trading up 0.1 percent.
Singapore’s Straits Times Index ended Wednesday up just 0.09 percent at 3239.10; September futures for the index were at 3239 on Wednesday, while October futures were at 3243 and November futures were at 3246.
Indonesia’s IDX index ended Wednesday down just 0.02 percent at 5873.27.
The Dow Jones Industrial average shed 0.40 percent to 26,385.28 on Wednesday, the Nasdaq Composite fell 0.21 percent to 7990.366 and the S&P 500 declined 0.33 percent to 2905.97. Futures for the three indexes were a tad higher in early trade.
Hong Kong’s Hang Seng Index rose 1.15 percent to 27,816.869 on Wednesday, while China’s CSI 300 gained 0.20 percent to 3417.241.
The U.S. dollar index was at 94.24 at 8:06 A.M. SGT after trading as high as 94.39 and as low as 94.12 on Wednesday, according to ICE futures data.
The 10-year U.S. Treasury note yield was at 3.055 percent at 8:17 A.M. SGT, after trading as high as 3.10 percent early on Wednesday and as low as 3.043 percent later in Wednesday’s session, according to Tullett Prebon data.
“The FOMC meeting has passed, and the wash-out is that we have seen a cap on the recent widening of interest rate expectations (through the rates market), and a better bid in Treasurys,” Chris Weston, head of research at Pepperstone Group, said in a note on Thursday.
“Monetary policy in the U.S. is further towards a more neutral setting, even if it is not restrictive by any means, and we see a further hike in December as the base-case, with close to an 80 percent probability priced into the swaps market,” Weston added.
The euro/dollar was at 1.1754 at 8:18 A.M. SGT after trading in a 1.1725 to 1.1798 range on Wednesday, according to DZHI data.
The dollar/yen was at 112.722 at 8:20 A.M. SGT after trading in a 112.60 to 113.136 range on Wednesday, according to DZHI data.
The dollar/yuan ended Wednesday at 6.8762 after trading in a 6.8684 to 6.8785 range on Wednesday, according to DZHI data.
The dollar/Singapore dollar was at 1.3656 at 8:21 A.M. SGT, after trading in a 1.3615 to 1.3663 range on Wednesday, according to DZHI data.
The dollar/Indonesian rupiah was at 14,900 at Wednesday’s close after trading in a 14,900 to 14,940 range, according to DZHI data.
Nymex WTI crude oil futures for November were up 0.74 percent at US$72.10 a barrel at 7:53 A.M. SGT, while ICE Brent crude oil futures for November were down 0.65 percent at US$81.34 a barrel at 5:49 A.M. SGT, according to Bloomberg data.