Singapore market trends Wednesday: Wall Street extends tumble amid tech selloff

Singapore durian vendorSingapore durian fruit

Singapore shares face a tough Wednesday, as the selloff on Wall Street deepened on Tuesday, with the Trump administration looking set to open a new front on its trade war with China.

“This is a macro train wreck unfolding in front of us,” Stephen Innes, head of Asia Pacific trading at OANDA, said in a note on Wednesday.

Trade war disarray post-APEC summit notwithstanding, with the Federal Reserve Board suggesting Trump administration fiscal stimulus will fade in 2019, there was no place to go but down for equities. It’s no longer a desynchronized global slowdown, but rather an expanding global growth sinkhole,” he said.

Innes also pointed to investor jitters that the Trump administration could turn the tech sector into a new battleground. A new proposal from the Trump administration would subject technology companies to restrictions on exporting certain technologies, particularly related to voice-activation and self-driving cars to China.

Tech stocks slide

On Wall Street, technology stocks continued to sell off, with Apple extending its tumble on concerns over slowing demand for iPhones in the wake of the company’s decision to release more models.

In addition, disappointing earnings from U.S. mass-market retailers Target and Kohl’s weighed on sentiment amid concerns that the U.S. consumer may be tapped out heading into the end-of-year holiday shopping season. U.S. retail sales, both online and in real life (IRL), will be closely watched amid the Thanksgiving holiday on Thursday and the Black Friday shopping fest that follows it.

White House scandals

It’s unclear whether the Trump White House’s latest scandals are affecting market sentiment. U.S. President Trump said on Tuesday that he would remain a “steadfast partner” of Saudi Arabia and said he doubted U.S. intelligence findings that Crown Prince Mohammed bin Salman directly ordered the murder of dissident journalist Jamal Khashoggi in October.

While Trump denied last week that he has financial ties to Saudi Arabia — something critics say could be influencing his actions — his businesses have in fact accepted large sums from the Saudi government both before and after he took office, in what may be violations of the emoluments clause of the U.S. Constitution.

In addition, Trump’s daughter, Ivanka Trump, who draws a White House salary, faces an investigation from incoming House Democrats over her reported use of personal email for government business. That’s an action Trump loudly criticized Hillary Clinton for during and after the 2016 election, and one which was not made illegal until after Clinton left her post as Secretary of State.

Indexes

Japan’s Nikkei 225 index was down 1.18 percent in early trade, while South Korea’s Kospi shed 1.43 percent by 8:05 A.M. SGT.

Singapore’s Straits Times Index ended Tuesday down 1.24 percent at 3026.99; November futures for the index were at 3027 on Tuesday, while December and January futures were at 3025 and 3027 respectively.

Hong Kong’s Hang Seng Index shed 2.02 percent to end at 25,840.34 on Tuesday, while China’s CSI 300 lost 2.31 percent to 3218.408.

Malaysia’s KLCI was up 0.25 percent at 1710.71 at Monday’s close, while Indonesia’s IDX Composite ended Monday down 0.12 percent at 6005.30; both markets were closed Tuesday for a holiday to mark the birth of the Prophet Muhammad.

The Dow Jones Industrial Average tumbled 2.21 percent to end Tuesday at 24,465.64, the Nasdaq Composite lost 1.70 percent to 6908.823 and the S&P 500 fell 1.82 percent to 2641.89. Futures for the three indexes were lower in early trade.

Currencies

The U.S. dollar index, which measures the buck against a basket of currencies, was at 96.82 at 7:05 A.M. SGT, climbing steadily from as low as 96.07 in Tuesday’s session, according to ICE futures data.

The 10-year U.S. Treasury note yield was at 3.065 percent at 5:59 A.M. SGT after slipping as low as 3.039 percent in Tuesday’s session, according to Tullett Prebon data.

The euro/dollar was at 1.1371 at 7:37 A.M. SGT after trading in a 1.1356 to 1.1472 range on Tuesday, according to DZHI data.

The British pound/dollar was at 1.2787 at 7:37 A.M. SGT after trading in a 1.2775 to 1.2883 range on Tuesday, according to DZHI data.

“The slide in sterling has been stemmed by the fact that Tories don’t have the 48 votes yet needed to trigger a no confidence vote [on Prime Minister Theresa May] but the risk is still there,” Kathy Lien, managing director of foreign-exchange strategy at BK Asset Management, said in a note on Tuesday, U.S. time.

The dollar/yen was at 112.679 at 7:38 A.M. SGT after trading in a 112.27 to 112.843 range on Tuesday, according to DZHI data.

The dollar/yuan ended Tuesday at 6.9448 after trading in a 6.9361 to 6.9463 range on Tuesday, according to DZHI data.

The dollar/Singapore dollar was at 1.3753 at 7:38 A.M. SGT after trading in a 1.3698 to 1.3754 range on Tuesday, according to DZHI data.

The dollar/Malaysian ringgit ended Tuesday at 4.1870 after trading in a 4.1781 to 4.1875 range on Tuesday, according to DZHI data.

The dollar/Indonesian rupiah ended Tuesday at 14,585  after trading in a 14,580 to 14,649 range on Tuesday, according to DZHI data.

Oil

Nymex WTI crude oil futures for January were down 0.02 percent at US$53.42 a barrel at 7:00 A.M. SGT, while ICE Brent crude oil futures for January were down 6.38 percent at US$62.53 a barrel at 6:59 A.M. SGT, according to Bloomberg data.

“Whatever the semblance of support there was at $55 WTI was sliced through like a hot knife through butter as a brutal combination of events continues to weigh on prices,” Innes said.

“At the heart of the matter is the lack of market respect for OPEC rhetoric regarding deep production cuts,” he said, noting planned cuts have been ignored previously. In addition, markets are questioning if the output reduction would be sufficient to rebalance oil markets amid an expected glut in the first quarter, which could be worsened by slowing demand as the global economy appears to be cooling.

 

Get the Shenton Wire morning briefing in your inbox