Singapore market trends Thursday: Caution after Wall Street volatility

U.S. one-dollar currency notes; taken September 2018.U.S. one-dollar currency notes; taken September 2018.

Singapore shares may face trepidation on Thursday after a volatile session on Wall Street on Wednesday, with minutes of the last Federal Reserve meeting sparking a rally in the U.S. dollar.

“Risk aversion continues to permeate across global markets,” Stephen Innes, head of Asia Pacific trading at OANDA, said in a note on Thursday. “While there isn’t one reason, there’s a sense of foreboding in the air that the next U.S. equity correction could be the ‘big one.'”

Federal Reserve minutes released on Wednesday showed that policymakers were unanimous in their decision to hike interest rates in September and that they generally expected “further gradual increases” ahead.

The release of the minutes comes in the wake of U.S. President Trump’s recent unprecedented verbal attacks on the Fed’s independence, which is seen as vital for economic stability. Trump’s attacks included earlier this week reportedly calling the rate hikes his “biggest threat,” after last week calling the central bank “loco” and “crazy.” White House Economic Adviser and previous CNBC commentator Larry Kudlow reportedly denied on Fox Business News on Wednesday that Trump was challenging the Fed’s independence and, somewhat bizarrely, that Trump actually agreed with the Fed.

Indexes

Japan’s Nikkei 225 index was down 0.23 percent by 8:15 A.M. SGT, while South Korea’s Kospi was off 0.46 percent by 8:20 A.M. SGT.

Singapore’s Straits Times Index gained 1.21 percent to 3071.10 on Wednesday; October futures for the index were at 3071 on Wednesday, while November and December futures were at 3075 and 3072 respectively.

Hong Kong’s market was closed on Wednesday; on Tuesday, Hong Kong’s Hang Seng Index edged up 0.07 percent to 25,462.26.

China’s CSI 300 index added 0.56 percent to 3118.25 on Wednesday.

Indonesia’s IDX Composite Index added 1.17 percent to 5868.62 on Wednesday, while Malaysia’s KLCI rose 0.22 percent to 1740.59.

On Wall Street, the Dow Jones Industrial Average shed 0.36 percent to 25,706.68, the Nasdaq composite edged down 0.04 percent to 7642.703 and the S&P 500 inched down 0.03 percent to 2809.21. Futures for the three indexes were in the red in early trade.

The DJIA traded in a volatile, wide band of 25,479.16 to 25,810.09 during Wednesday’s session.

Currencies

The U.S. dollar index was at 95.66 at 7:46 A.M. SGT after rising steadily from as low as around 95.13 early in Wednesday’s session, according to ICE futures data.

The 10-year U.S. Treasury note yield was at 3.208 percent at 7:57 A.M. SGT after rising steady from as low as 3.152 percent from the middle of Wednesday’s session, according to data from Tullett Prebon.

Innes said the dollar’s rally reflected to factors: A pick-up in safe-haven flows and the Fed minutes’ confirmation that rates would continued to be normalized.

“This was the tail risk going into the minutes as some market participants thought the FOMC would walk back some of the markets’ more hawkish interpretation of Jay Powell post rate hike presser,” Innes said.

The euro/dollar was at 1.1504 at 8:07 A.M. SGT after trading in a 1.1495 to 1.1580 range on Wednesday, according to DZHI data.

The dollar/yen was at 112.589 at 8:08 A.M. SGT after trading in a 111.98 to 112.717 range on Wednesday, according to DZHI data.

The dollar/yuan ended Wednesday at 6.9262 after trading in a 6.9101 to 6.9285 range on Wednesday, according to DZHI data.

The dollar/Singapore dollar was at 1.3779 at 8:10 A.M. SGT after trading in a 1.3723 to 1.3784 range on Wednesday, according to DZHI data.

The dollar/Indonesian rupiah ended Wednesday at 15,150 after trading in a 15,150 to 15,200 range, according to DZHI data.

The dollar/Malaysian ringgit was at 4.1540 at 8:03 A.M. SGT after trading in a 4.1450 to 4.1535 range on Wednesday, according to DZHI data.

Oil

Nymex WTI crude oil futures for November were up 0.27 percent at US$69.94 a barrel at 7:27 A.M. SGT, while ICE Brent crude oil futures for December were down 1.67 percent at US$80.05 a barrel at 5:59 A.M. SGT, according to Bloomberg data.

Read more: Crude mixed ahead of Asia open Thursday after surprise US inventory build

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