Singapore market trends Thursday: Wall Street tumble spreads into Asia markets

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Singapore’s shares will face a turbulent Thursday after Wall Street tumbled, after a fifth straight session of declines sent the S&P 500 to a three-month low.

Wall Street’s fall didn’t appear to have a clear, immediate cause.

“The stock market is doing what markets do best this afternoon: panic selling without a fundamental reason,” Chris Rupkey, chief financial economist at MUFG, said in a note on Wednesday U.S. time.

However, Rupkey pointed to some concerns that the earnings outlook was dimming.

“The biggest boost for corporate earnings this year has been the biggest corporate tax cut in history. That supports current market valuations for this year,” he said, but added, “What about 2019 when America’s trade war with China is accelerating from not just how many goods they buy from us and sell to us. The war is now about how they do business and how China runs and supports and grows its entire economy. In other words this disagreement between China and the U.S. could go on a long long time.”

He also noted that if the days-long stock selloff doesn’t end soon, it could weigh on economic growth by hurting confidence and reducing spending.

Blame rising rates?

Some analysts pointed to rising U.S. Treasury note yields as one potential cause for the selloff.

“Cheap money has been the rocket fuel for equities as investors piled in the past two years given that it was the only game in town to get a decent yield. But the more aggressive Fed rate-hike schedule has brought the gravy train to an end sooner than expected,” Stephen Innes, head of Asia Pacific trading at OANDA, said in a note on Thursday.

In the wake of Wall Street’s fall, U.S. President Trump issued another criticism of the U.S. Federal Reserve that before his time in office was unprecedented as central bank independence has long been considered important to maintaining economic stability.

Trump reportedly called the Fed “crazy” for raising interest rates this year, appearing to blame the central bank for Wednesday’s stock market drop. After long touting stock market rises as evidence his policies were positive, Trump appeared to be trying to disengage from the blame for the drop.

Another factor markets may be eyeing: Hurricane Michael, among the strongest storms to hit Florida in decades, has caused disruptions to oil production, in addition to destruction on land. That could be a wild card for U.S. economic growth.

Indexes

Japan’s Nikkei 225 tumbled more than 3 percent at the open, while South Korea’s Kospi opened down 2.36 percent.

Singapore’s Straits Times Index was down 1.11 percent at 3131.48 on Wednesday; October futures were at 3132 on Wednesday, while November and December futures were at 3136 and 3134.

Hong Kong’s Hang Seng Index edged up 0.08 percent to 26,193.07 on Wednesday, while China’s CSI 300 index shed 0.22 percent to 3281.598.

The Dow Jones Industrial Average tumbled 3.15 percent to 25,598.74, the Nasdaq Composite plunged 4.08 percent to 7422.05 and the S&P 500 gave away 3.29 percent to 2785.68. Futures for the three indexes were nearly flat in early trade.

Currencies

The U.S. dollar index was at 95.46 at 6:04 A.M. SGT after trading as high as 95.77 in Wednesday’s session before falling as low as 94.38, according to ICE futures data.

The 10-year U.S. Treasury note yield was at 3.168 percent at 7:43 A.M. SGT, dropping from as high as 3.239 percent in Wednesday’s trade, according to Tullett Prebon data.

The euro/dollar was at 1.1532 at 7:45 A.M. SGT after trading in a 1.1477 to 1.1545 range on Wednesday, according to DZHI data.

The dollar/yen was at 112.111 at 7:46 A.M. SGT after trading in a 112.09 to 113.287 range on Wednesday, off as high as 114.55 earlier this month, according to DZHI data.

The dollar/yuan ended at 6.9242 on Wednesday after trading in a 6.9149 to 6.9242 range, well up from levels as low as 6.8650 it touched during last week’s holiday, according to DZHI data.

The dollar/Singapore dollar was at 1.3828 at 7:49 A.M. SGT after trading in a 1.3790 to 1.3838 range on Wednesday, according to DZHI data.

The dollar/Indonesian rupiah closed Wednesday at 15,198, after trading in a 15,175 to 15,226 range, according to DZHI data.

The dollar/Malaysian ringgit closed Wednesday at 4.1515 after trading in a 4.1485 to 4.1550 range, according to DZHI data.

Oil

Nymex WTI crude oil futures for November fell 0.67 percent to US$72.68  a barrel by 7:15 A.M. SGT, while ICE Brent crude oil futures for December were down 2.25 percent at US$83.09 a barrel at 6:00 A.M. SGT.

Read more: Crude weaker on Thursday after API estimates

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