UPDATE: Singapore market trends Tuesday: China concerns may weigh risk appetite

Singapore’s shares may start a rainy Tuesday on the back foot, amid concerns over China after its stock market tumbled in the previous session.

“Fundamentally, nothing has changed in the U.S. economy,” Kathy Lien, managing director of foreign-exchange strategy, said in a note late Monday U.S. time.

“However the problems for China and Italy continue to grow, causing risk appetite to sour. Chinese stocks plunged 4 percent overnight, the yuan weakened and the U.S. Treasury added salt to the wound by expressing their concern about China’s weakening currency, fueling speculation that they could label China a manipulator for the first time since 1994,” she added.

Tensions in the U.S. trade war with China may be ratcheting up as well, with U.S. Secretary of State Mike Pompeo and Chinese Foreign Minister Wang Yi reportedly exchanging veiled barbs at a meeting on Monday.

“A possible train wreck on the negotiation front could completely derail global markets. We should not underestimate the potentially destabilising effect from a weaker yuan will have on regional markets if not global markets,” Stephen Innes, head of Asia Pacific trading at OANDA, said in a note on Tuesday.

Indexes

Japan’s Nikkei 225 index was down 1.20 percent at 8:20 A.M. SGT, after closing for the Health-Sports Day holiday on Monday. South Korea’s market was closed Tuesday for Hangeul Day.

Singapore’s Straits Times Index ended Monday down 0.88 percent at 3181.45; October futures for the index were at 3183 on Monday, while November and December futures were at 3187 and 3184 respectively.

Hong Kong’s Hang Seng Index was off 1.39 percent at 26,202.57 on Monday, while China’s CSI 300 index tumbled 4.30 percent to 3290.899; China’s markets had been closed all of last week.

Indonesia’s IDX Composite ended up 0.51 percent at 5761.07 on Monday.

The Dow Jones Industrial Average ended up 0.15 percent at 26,486.78, the Nasdaq Composite fell 0.67 percent to 7735.949 and the S&P 500 edged down 0.04 percent to 2884.43. Futures for the three indexes were nose down in early trade.

Currencies

The U.S. dollar index, which measures the greenback against a basket of currencies, was at 95.75 at 8:15 A.M. SGT after climbing as high as 96.02 on Monday, according to ICE futures data.

The 10-year U.S. Treasury note yield was at 3.232 percent at 8:26 A.M. SGT, according to Tullett Prebon data. The U.S. bond market was closed on Monday for the Columbus Day or Indigenous Peoples’ Day holiday.

Euro declines

The euro/dollar was at 1.1491 at 8:28 A.M. SGT after trading in a 1.1458 to 1.1533 range on Monday, according to DZHI data.

The euro’s decline was on weaker German industrial production data, Lien said.

“Economists were hoping that industrial production would rebound in August after falling sharply in July but instead it contracted for the third consecutive month. Despite positive and in some ways hawkish comments from ECB officials, we haven’t seen consistent improvements in Eurozone data,” she added.

The dollar/yen was at 113.003 at 8:29 A.M. SGT, after trading in a 112.79 to 113.943 range on Monday, according to DZHI data.

The dollar/yuan ended Monday at 6.9289 after trading in a 6.8679 to 6.9319 range during the session, according to DZHI data.

The dollar/Singapore dollar was at 1.3842 at 8:31 A.M. SGT after trading in a 1.3814 to 1.3866 range on Monday, according to DZHI data.

The dollar/Indonesian rupiah ended Monday at 15,215 after trading in a 15,175 to 15,258 range during the session, according to DZHI data.

Oil

Nymex WTI crude oil futures for November were up 0.11 percent at US$74.37 a barrel at 8:01 A.M. SGT, while ICE Brent crude oil futures for December were up 0.10 percent at US$83.99 a barrel, according to Bloomberg data.

Read more: Crude may rebound Tuesday on weaker Iran oil exports

This article was originally published on Tuesday 9 October 2018 at 8:44 A.M. SGT; it has since been updated to include the U.S.-China meeting.

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