Singapore market trends Wednesday: Mixed signals after Wall Street falls, early Asia markets rise

Singapore subway MRT escalator at One North; taken August 2018.Singapore MRT escalator at One North.

Singapore’s shares will open with mixed signals on Wednesday, with a continued selloff on Wall Street amid a brew of concerns offset by rises in Japan and South Korea markets, suggesting traders may believe the jitters are baked into the cake.

“Risk sentiment is on its back foot this morning with global equities and commodities weaker. The catalysts are nothing new and are a toxic geopolitical cocktail of nagging concerns,” Stephen Innes, head of Asia Pacific trading at OANDA, said in a note on Wednesday.

He pointed to a brew of concerns over China’s economic growth, a lack of progress on Brexit, Italian budget issues and the tensions over the apparent murder of journalist Jamal Khashoggi by Saudi Arabian agents.

Wall Street took a tumble intraday on Tuesday, before recovering some losses, as concerns about the earnings outlooks from heavyweights Caterpillar and 3M spread to hit sentiment more broadly.

“The U.S. equities’ Teflon persona was seriously questioned,” Innes said. “Like migratory birds heading south for winter, the icy chill enveloping global stock markets has sent investors flocking to safe to haven assets.”

China concerns

Innes also pointed to a Bloomberg report, citing people familiar with the situation, that the People’s Bank of China (PBOC) planned to give 10 billion yuan to the China Bond Insurance Co. to support private companies’ debt sales.

“That sent off alarm bells rather than support equity markets. Often these types of interventions suggest much deeper rooted economic issues,” he said.

Markets may have another reason for jitters: On Tuesday, U.S. time, U.S. President Trump issued another attack on the U.S. Federal Reserve, once again taking the unprecedented step of appearing to damage the central bank’s independence, which is crucial to its credibility. This time, Trump said that Fed chief Jerome Powell, who Trump selected for the post, was endangering economic growth and the president complained that former President Obama had zero interest rates, making it difficult to “compete.”

Saudi tensions

After repeatedly claiming ever-changing and sometimes implausible Saudi explanations for the disappearance and apparent murder and dismemberment of journalist Jamal Khashoggi were credible, Trump reportedly said on Tuesday that Saudi officials were involved in the “worst coverup ever.” The U.S. has revoked visas for agents implicated in the apparent murder, a relatively mild rebuke, and Trump stepped away from his presidential authority and left the next action to Congress, the Washington Post reported.

The controversy over the apparent brutal murder has included heightened scrutiny Trump’s continuing business ties to the country, which could be in violation of the Constitutional prohibition on “emoluments” from foreign countries. Trump has also repeatedly pointed to a US$110 billion arms sale he announced last year as a reason to avoid punitive action against Saudi Arabia, with the U.S. president repeatedly and exponentially providing false estimates of the jobs that might be tied to that deal, with Axios calling it “magic math.”

Indexes

The Nikkei 225 index opened up 0.45 percent, while South Korea’s Kospi was up 0.44 percent in early trade.

Singapore’s Straits Times Index dropped 1.52 percent to 3031.39 on Tuesday; October futures for the index were at 3029 on Tuesday, while November and December futures were at 3032 and 3029.

Hong Kong’s Hang Seng Index tumbled 3.08 percent to 25,346.551, while China’s CSI 300 lost 2.66 percent to 3183.43.

Indonesia’s IDX Composite Index fell 0.73 percent to 5797.89 on Tuesday, while Malaysia’s KLCI lost 1.44 percent to 1697.60.

The Dow Jones Industrial Average lost 0.5 percent to end at 25,191.43 after trading as low as 24,768.79 during the session. The Nasdaq Composite fell 0.42 percent to end at 7437.539, off a session low of 7260.13. The S&P 500 shed 0.55 percent to end at 2740.69 off a low of 2691.43 during the session. Futures for the three indexes were nearly flat in early trade on Wednesday.

Currencies

The U.S. dollar index, which measures the greenback against a basket of currencies, was at 95.92 at 8:02 A.M. SGT, after rising as high as 96.11 on Tuesday and trading as low as 95.82, according to ICE futures data.

The 10-year U.S. Treasury note yield was at 3.167 percent at 8:13 A.M. SGT after spiking as low as 3.116 percent during Tuesday’s session, according to Tullett Prebon data.

The euro/dollar was at 1.1473 at 8:14 A.M. SGT after trading in a 1.1438 to 1.1494 range on Tuesday, according to DZHI data.

The dollar/yen was at 112.376 at 8:14 A.M. SGT after trading in a 111.94 to 112.841 range on Tuesday, according to DZHI data.

The dollar/yuan ended Tuesday at 6.9372 after trading in a 6.9347 to 6.9445 range during the session, according to DZHI data.

The dollar/Singapore dollar was at 1.3780 at 8:15 A.M. SGT after trading in a 1.3770 to 1.3817 range on Tuesday, according to DZHI data.

The dollar/Indonesian rupiah ended Tuesday at 15,185 after trading in a 15,180 to 15,213 range during the session, according to DZHI data.

The dollar/Malayisan ringgit was at 4.1610 at 7:24 A.M. SGT after trading in a 4.1566 to 4.1640 range on Tuesday, according to DZHI data.

Oil

Nymex WTI crude oil futures for December were down 0.20 percent at US$66.30 a barrel at 6:55 A.M. SGT, while ICE Brent crude oil futures for December were off 4.25 percent at US$76.44 a barrel at 6:00 A.M. SGT, according to data from Bloomberg.

Read more: API estimates, Saudi news weigh on crude Wednesday

 

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