Singapore market trends Wednesday: Trade tensions may offset positive Black Friday signs

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

Singapore shares face mixed signals on Wednesday, as concerns over the U.S. trade war are rising, even as data show American consumers have retained their willingness to spend unwisely.

Amazon reported that Black Friday and Cyber Monday turned out to be its biggest shopping days ever, suggesting the American consumer may keep the economy humming along a little longer.

But trade tensions are still humming in the background.

The upcoming meeting between Chinese President Xi Jinping and U.S. President Trump remains a key market focus amid conflicting signals.

Kathy Lien, managing director of foreign-exchange strategy at BK Asset Management, said in a note on Tuesday, U.S. time, that concerns remained that the U.S. would stick to its hardline on trade.

“Despite an upcoming meeting between Presidents Trump and Xi, the U.S. Administration continues to downplay the possibility of an agreement. Today, the WH Chief Economic Advisor said that he was disappointed by trade talks so far and Trump is ready to add tariffs on China,” she noted.

“While this could be a political move to surprise after downplaying expectations, for the time being, these comments reaffirm our view that the meeting will result in nothing substantial,” she said.

Xi and Trump are set to meet at the G-20 meeting in Buenos Aires later this week, and optimism that at least a face-saving, if unsubstantive, agreement would emerge was running high among analysts. But Trump told the Wall Street Journal in an interview published this week that it was “highly unlikely” he would hold off on his planned increases to tariffs on Chinese goods.

In addition, Trump reportedly told the WSJ that he could put a 10 percent tariff on mobile phones, saying “people could stand that very easily.” Those comments weighed on Apple shares.

KGI: ‘Stay engaged’

But when it comes to Singapore shares, KGI advised in a note on Tuesday that investors “stay engaged” ahead of the G-20 meeting.

“Singapore stocks are already cheap, so downside risks are limited in our view. Should Trump and Xi announce a trade ceasefire at the G-20 meeting, this would remove a key overhang over investors’ sentiment and provide the basis for a short-term rally in equity markets,” KGI said.

Indexes

Japan’s Nikkei 225 index was up 0.70 percent at 8:14 A.M. SGT, while South Korea’s Kospi was nearly flat, up just 0.06 percent at 8:20 A.M. SGT.

Singapore’s Straits Times Index ended Tuesday down 0.10 percent at 3090.40; November futures for the index were at 3091 on Tuesday, while December and January futures were at 3089 and 3091 respectively.

Hong Kong’s Hang Seng Index was down 0.17 percent at 26,331.961 at Tuesday’s close, while China’s CSI 300 was off 0.13 percent at 3137.241.

Malaysia’s KLCI ended down 1.0 percent at 1684.94, while Indonesia’s IDX Composite was off 0.15 percent at 6013.59.

The Dow Jones Industrial Average gained 0.44 percent to end at 24,748.73, the Nasdaq Composite was nearly flat at 7082.70 and the S&P 500 rose 0.33 percent to 2682.17. Futures for the three indexes were only slightly positive in early trade.

Currencies

Read more: Currency trends Wednesday: US dollar rises amid comments from Fed’s Clarida

Oil

Nymex WTI crude oil futures for January were up 0.81 percent at US$51.98 a barrel at 7:27 A.M. SGT, while ICE Brent crude oil futures were down 0.45 percent at US$60.21 a barrel at 6:48 A.M. SGT, according to Bloomberg data.

Earlier this week, Goldman Sachs’ hed of commodities research, Jeff Currie, told CNBC that US$50 a barrel oil was too low for U.S. shale producers and could create knock-on effects for their ability to keep paying their high-yield bonds.

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