Singapore shares may end the week on an upbeat, with Wall Street recovering from a sharp intraday drop on Thursday amid a report that the U.S. Federal Reserve might cool its interest-rate jets.
While Wall Street had initially tumbled on Thursday on news Canada’s Justice Department arrested Huawei Technologies Chief Financial Officer Meng Wanzhou at the request of the U.S., shares later recovered amid a report from the Wall Street Journal that U.S. Federal Reserve officials were considered whether to signal a wait-and-see approach after a December interest rate increase.
The Huawei arrest was seen 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.
“On paper, the Trump Administration wants to look like they are willing to work with China on trade but the seriousness of their intentions are questioned by this arrest,” Kathy Lien, managing director of foreign-exchange strategy at BK Asset Management, said in a note on Thursday, U.S. time.
Other analysts pointed to further negatives lurking for stocks, particularly blowback from the U.S. trade war.
Chris Rupkey, chief financial economist at MUFG, said in a note on Thursday, U.S. time, that U.S. weekly unemployment claims remained high in the first week of December, after touching their lowest since 1969 back in September.
“Trump has shelved the 25 percent tariffs on US$200 billion of imported goods from China, but this deescalation may be too little too late for the economy. The damage has been done,” Rupkey said.
“Trump administration claims that there would be short-term pain associated with the tariffs to correct the wrongs now looks like it might be more of a long-term drag on investor and business confidence. The odds of recession the next two years have risen dramatically, and if one does occur, it will be the Trump recession,” he added.
Rupkey said the U.S. non-farm payrolls report later on Friday would show whether the labor market has peaked amid signs of increasing layoffs.
Japan’s Nikkei 225 index was up 0.42 percent at 8:17 A.M. SGT, while South Korea’s Kospi was up 0.75 percent at 8:22 A.M. SGT.
Singapore’s Straits Times Index ended Thursday down 1.28 percent at 3115.52; December futures for the index were at 3113 on Thursday, while January and February futures were at 3115 and 3117 respectively.
Hong Kong’s Hang Seng Index shed 2.47 percent to 26,156.381 on Thursday, while China’s CSI 300 lost 2.16 percent to 3181.673.
Malaysia’s KLCI was down 0.29 percent at 1683.34 at Thursday’s close, while Indonesia’s IDX Composite was off 0.29 percent at 6115.49.
The Dow Jones Industrial Average was down only 0.32 percent at 24,947.67 at Thursday’s close, after falling as low as 24,242.22 during the session, the Nasdaq Composite ended up 0.42 percent at 7188.258 and the S&P 500 was off 0.15 percent at 2695.95. Futures for the three indexes were a tad higher in early trade.
Nymex WTI crude oil futures for January were flat at US$51.49 at 8:02 A.M. SGT after falling overnight, while ICE Brent crude oil futures for February were down 2.44 percent at US$60.06 a barrel at 6:58 A.M. SGT, according to Bloomberg data.
“A sense of disappointment swept across oil markets on Thursday after OPEC delayed a decision on production cuts,” Lukman Otunuga, research analyst at FXTM, said in a note on Friday.
“Although OPEC tentatively agreed to cut oil output, the cartel’s failure to decide on exactly how much crude will be taken off the markets sent crude prices tumbling more than 3 percent. With OPEC waiting on non-OPEC members before making any decision on production cuts, Russia clearly has a significant role in the deal,” Otunuga said.