Singapore shares may struggle on Friday, as banks may be pressured by signs that interest rates may not rise much more in the near term, offsetting indications tensions in the U.S. trade war could be dialed back.
Wall Street ended lower as banks fell in the wake of the minutes of the last U.S. Federal Reserve meeting. The minutes showed Fed officials were on track for another rate increase “fairly soon,” but also started debating when to pause the hiking cycle.
Banks’ net interest margins tend to get a fillip from higher benchmark rates.
“The Fed’s dovish adjustments are a bit more than the market expected. But the main takeaway is that quarterly hikes are not the new normal, which means the markets, and the U.S. dollar will be hypersensitive to data and Fed speak even more so in 2019, where the Fed will give press conferences every meeting,” Stephen Innes, head of Asia Pacific trading at OANDA, said in a note on Wednesday.
Trade tensions to ease?
Bloomberg reported late on Thursday Singapore time that Trump had hinted of a trade deal with China, saying he was very close to “doing something” ahead of a meeting with Chinese President Xi Jinping. Talks between U.S. and Chinese officials in the weeks ahead of the meeting have centered on a possible truce, with the U.S. delaying planned tariff increases in exchange for Chinese concessions, Bloomberg reported, citing people familiar with the discussions.
But with the Trump White House’s history of chaotic policy lurches, traders may struggle to know how seriously to take any updates on talks.
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 has been running high among analysts.
If an agreement on lowering tensions is reached, it would mark a substantial shift in White House policy. Previously, 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 previously 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.
Japan’s Nikkei 225 index edged up 0.05 percent by 8:19 A.M. SGT, while South Korea’s Kospi was flat at 8:24 A.M. SGT.
Singapore’s Straits Times Index ended Thursday up 0.48 percent at 3109.44; December futures for the index were at 3107 on Thursday, while January futures were at 3109.
Hong Kong’s Hang Seng Index ended Thursday down 0.87 percent at 26,451.029, while China’s CSI 300 was off 1.30 percent at 3137.654.
Malaysia’s KLCI index was up 0.58 percent at 1696.34 at Thursday’s close, while Indonesia’s IDX Composite was up 1.93 percent at 6107.17.
The Dow Jones Industrial Average shed 0.11 percent to 25,338.84, the Nasdaq Composite was off 0.25 percent at 7273.083 and the S&P 500 fell 0.22 percent to 2737.76. Futures for the three indexes were slightly lower in early trade.
Nymex WTI crude oil futures for January were down 0.23 percent at US$51.33 a barrel at 8:11 A.M. SGT, while ICE Brent crude oil futures for January were up 1.28 percent at US$59.51 a barrel at 6:55 A.M. SGT, according to Bloomberg data.