Singapore market trends Wednesday: Euro stumbles amid concerns over Italy

Euro coinsPhoto by Leslie Shaffer

Singapore shares face an uncertain open on Wednesday amid a spike higher in the U.S. dollar and concerns about what the revamped NAFTA deal may portend. The euro also stumbled as Italy’s budget deficit sparked concerns.

U.S. markets may like the revamped NAFTA deal, but markets globally appear less enthused.

“Global markets are in risk-off mode this morning [Tuesday] because they’re moving onto the next obsessions, namely concerns about festering Eurozone problems centered upon Italy and whether Trump thoroughly caved on most NAFTA demands only because he wants to intensify his attacks on China,” Scotiabank said in a note on Tuesday.

In addition, Federal Reserve chief Jerome Powell said in a speech on Tuesday U.S. time that the Fed would respond “with authority” if inflation becomes a problem, adding that sustained low unemployment can spur price rises. Analysts have also noted that the Trump administration’s trade war can spur inflation as tariffs give companies cover to raise their prices.

Indexes

Japan’s Nikkei 225 index was down 0.18 percent at 8:07 A.M. SGT. South Korea’s market was closed for a holiday.

Singapore’s Straits Times Index was down 0.39 percent at 3242.65 at Tuesday’s close; October futures were at 3245 on Tuesday, while November and December futures were at 3249 and 3247 respectively.

Read more: Singapore stocks to watch Wednesday: Wheelock, Stamford Land, Dyna-Mac, Jardine Strategic

Hong Kong’s Hang Seng Index tumbled 2.38 percent to end at 27,126.381 on Tuesday. China’s markets were closed on Monday and Tuesday and will be closed on Wednesday; China’s CSI 300 gained 1.04 percent to end at 3438.865 on Friday.

Indonesia’s IDX Composite Index ended Tuesday down 1.16 percent at 5875.62.

The Dow Jones Industrial Average rose 0.46 percent to end at 26,773.94 on Tuesday, the Nasdaq Composite was down 0.47 percent at 7999.547 and the S&P 500 edged down 0.04 percent to 2923.43. Futures for the three indexes were nearly flat in early trade.

Currencies

The U.S. dollar index, which measures the greenback against a basket of currencies, was at 95.48 at 6:04 A.M. SGT after climbing as high as 95.72 on Tuesday after starting off as low as 95.32, according to ICE futures data.

The 10-year U.S. Treasury note yield was at 3.063 percent at 7:43 A.M. SGT, compared with as high as 3.085 percent early on Tuesday and trading as low as 3.046 percent, according to Tullett Prebon data.

Euro drops

The euro/dollar was at 1.1552 at 7:48 A.M. SGT after trading in a 1.1504 to 1.1580 range on Tuesday, according to DZHI data.

Italy’s decision to stick with a larger-than-allowed deficit target in its budget may set off a battle with the eurozone, and has sent the euro tumbling and Italian bond yields climbing.

“The defiant mood of the Italian lawmakers has sent chills through the foreign-exchange market as fears of another sovereign debt crisis began to swirl around the euro/dollar,” Boris Schlossberg, managing director of foreign-exchange strategy at BK Asset Management, said in a note on Tuesday.

“Italy is a far bigger problem for EU than Greece ever was. It’s 1 trillion-plus economy with the largest debt to GDP ratio amongst the major OECD nations. Any deterioration of its fiscal position could usher in a buyer strike for its sovereign debt, which in turn could destroy the balance sheets of its banking sector,” he added.

The dollar/yen was at 113.598 at 7:49 A.M. SGT after trading in a 113.50 to 114.017 range on Tuesday, according to DZHI data.

The dollar/yuan closed Tuesday at 6.8679 after setting a tight 6.8670 to 6.8688 range on Tuesday, according to DZHI data.

The dollar/Singapore dollar was at 1.3729 at 7:51 A.M. SGT, after trading in a 1.3711 to 1.3767 range on Tuesday, according to DZHI data.

The dollar/Indonesian rupiah closed at 15,040 on Tuesday after trading in a 14,900 to 15,048 range on Tuesday, according to DZHI data.

Oil

Nymex WTI crude oil futures for November were down 0.04 percent at US$75.20 a barrel at 7:15 A.M. SGT, while ICE Brent crude oil futures for December were off 0.21 percent at US$84.80 a barrel at 5:59 A.M. SGT, according to Bloomberg data.

Read more: Crude down ahead of open on mixed estimates of US inventories

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