UPDATE: Singapore market trends Thursday: ‘Catch-up’ trade after US holiday may weigh shares

SGX ticker at Shenton Way building in Singapore; taken October 2018.SGX ticker at Shenton Way building in Singapore; taken October 2018.

Singapore shares may face another day of declines on Thursday as the U.S. market closure on Wednesday may spur “catch-up” risk-off trades amid concerns the U.S.-China trade rapprochement was significantly over-hyped by the Trump administration.

In addition, Canada’s Justice Department arrested Huawei Technologies Chief Financial Officer Meng Wanzhou at the request of the U.S., in a move that could further heighten tensions between the U.S. and China. Meng is suspected of violating trade sanctions on Iran. Huawei said in a statement that it wasn’t aware of any wrongdoing by Meng, Reuters reported.

“This headline is quite significant as the U.S. government is attempting to persuade allies to stop using Huawei equipment due to security fears, and this headline could weigh negatively on tech stocks. Recall that over 100 Chinese companies traded limit down when news broke the U.S. urged allies to blacklist Huawei,” Stephen Innes, head of Asia Pacific trading at OANDA, said in a note on Thursday.

The U.S. trade war had appeared to at least have been put on a partial hiatus after the G-20 meeting in Buenos Aires over the weekend, with U.S. President Trump and Chinese President Xi Jinping initially reported to have agreed to hold off on planned tariff increases for 90 days while trade talks continue.

But signs had emerged that the U.S. side had over-hyped what actually came out of the meeting, with Chinese officials failing to confirm what Trump announced and as Trump launched another of his signature, erratic tweet-storms. Chinese officials reportedly didn’t even confirm there was a 90-day agreement.

“President Xi Jinping has been quiet and the overall risk trade has low trust for general guidance as they monitor actual progress,” Derek Holt, head of capital markets economics at Scotiabank, said in a note on Wednesday.

“Restrained liquidity due to the U.S. holiday could well amplify volatility in response to developments,” Holt added.

Indexes

Nikkei 225 index futures were tipping further declines, with CME futures at 21,770 at 8:00 A.M. SGT; on Wednesday, the Nikkei 225 index was down 0.53 percent at 21,919.33.

South Korea’s Kospi index was down 0.50 percent at 8:05 A.M. SGT.

Singapore’s Straits Times Index was down 0.38 percent at 3155.92 at Wednesday’s close, off the day’s low of 3127.70; December STI futures were at 3152 on Wednesday, while January and February futures were at 3155 and 3157.

Hong Kong’s Hang Seng Index shed 1.62 percent to 26,819.69 by Wednesday’s close, while China’s CSI 300 lost 0.48 percent to end at 3252.004.

Malaysia’s KLCI index ended down 0.40 percent at 1688.27 on Wednesday, while Indonesia’s IDX Composite shed 0.32 percent to 6133.12.

On Tuesday, the Dow Jones Industrial Average tumbled 3.10 percent to 25,027.07, the Nasdaq Composite dropped 3.80 percent to 7158.426 and the S&P 500 lost 3.24 percent to 2700.06. The U.S. markets were closed on Wednesday to mark the death of former U.S. President George H.W. Bush.

Futures for the three indexes were sharply lower in early trade.

Oil

Nymex WTI crude oil futures for January were down 0.30 percent at US$52.73 a barrel at 7:50 A.M. SGT, while ICE Brent crude oil futures for February were down 0.84 percent at US$61.56 a barrel at 6:59 A.M. SGT, according to Bloomberg data.

This article was originally published on Thursday 6 December 2018 at 8:20 A.M. SGT; it has since been updated to include Huawei developments.

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