Traders may be wary heading into Monday’s session after Wall Street tumbled on Friday amid concerns over economic growth and global trade tensions.
In addition, China trade data released on Saturday came in weaker than expected, with November exports rising 5.4 percent on-year, compared with a Reuters poll forecast for a 10 percent rise, Reuters reported.
That could spur further fears over global growth, especially as the U.S. trade war shows no clear signs of rapprochement.
U.S. economic growth may also face fears of a slowdown: On Friday, the U.S. non-farm payrolls report showed a 155,000 rise in jobs in November, missing a Reuters poll forecast for 200,000, while wages also rose less than expected, Reuters reported. That had weighed on the U.S. dollar and U.S. Treasury note yields.
Shane Oliver, head of investment strategy and chief economist at AMP Capital, noted that shares had a roller-coaster week last week amid initial optimism over the outcome of the meeting between Chinese President Xi Jinping and U.S. President Trump, followed by news that Trump over-hyped the results and that the U.S. had requested the arrest of a senior Huawei executive.
“It’s still too early to say shares have seen the bottom,” Oliver said in a note on Saturday. “When investors want to sell they will, and so markets can still head lower until there is a sentiment washout.”
But he added, “our assessment remains that this is overdone, and share markets aren’t going down into another ‘grizzly bear’ market as the conditions aren’t in place for a U.S./global recession: we haven’t seen the sort of excess in discretionary spending, debt and inflation that normally precede recessions; monetary policy is not tight (and the Fed is likely to pause next year); and the slowdown in growth indicators looks like the short lived shallow slowdowns we saw into 2012 and 2016.”
US political uncertainty may weigh
To be sure, U.S. political uncertainty may also weigh on sentiment, with federal prosecutors alleging Trump directed payments to cover up extramarital affairs with two women, amounting to violations of campaign finance laws, and with U.S. investigators uncovering further ties between the Trump campaign and Russian operatives. Despite Trump’s claim over Twitter that the announcement “totally clears the President [sic],” it in fact alleges he committed at least two felonies, which may once again raise the specter of an impeachment.
The Washington Post reported on Sunday, U.S. time, that at least 14 Trump associates interacted with Russian contacts during Trump’s campaign, with an Obama era ambassador to Russia calling it “extremely unusual” and “extraordinary” for the number and nature of the contacts.
Futures for Japan’s Nikkei 225 index were down 105 points at 21,235 at 7:00 A.M. SGT, compared with the index’s close on Friday at 21,678.68.
Singapore’s Straits Times Index ended Friday off 0.14 percent at 3111.12; December futures for the index were at 3108 on Friday, while January and February futures were at 3111 and 3113, respectively.
Hong Kong’s Hang Seng Index was down 0.35 percent at 26,063.76, while China’s CSI 300 was nearly flat at 3181.565.
Malaysia’s KLCI index was down 0.17 percent at 1680.54, while Indonesia’s IDX Composite was up 0.18 percent at 6126.36 at Friday’s close.
The Dow Jones Industrial Average dropped 2.24 percent to 24,388.98 on Friday, the Nasdaq Composite fell 3.05 percent to 6969.252, and the S&P 500 shed 2.33 percent to 2633.08. DJIA futures were down nearly 200 points at 24,239 at 7:02 A.M. SGT.
Nymex WTI crude oil futures for January were up 2.18 percent at US$52.61 a barrel on Friday, while ICE Brent crude oil futures for February were up 2.68 percent at US$61.67 a barrel on Friday, according to Bloomberg data.
“A collective sigh of relief was felt across oil markets after OPEC+ delegates successfully reached an agreement to cut production by 1.2 million barrels per day,” Lukman Otunuga, research analyst at FXTM, said in a note on Friday.
“With OPEC agreeing to cut oil production larger than initially expected, oil prices are poised to extend gains in the short term,” Otunuga said, but noted that U.S. shale production may pick up some of the slack and that slowing global economic growth and the U.S. trade war with China could hurt oil demand.