Singapore market trends Wednesday: Positive trade war news offset by US political chaos

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

Singapore shares face conflicting cues heading into Wednesday’s session, as Wall Street failed to hold on to either gains or losses in a volatile session on Tuesday amid a combination of positive developments in the U.S. trade war and fresh political chaos from the Trump White House.

“Risk sentiment tentatively stabilised overnight but by no means is the market out of the woods after another whippy trading session on Wall Street,” Stephen Innes, head of Asia Pacific trading at OANDA, said in a note on Wednesday.

“While markets have been overwhelmed by risk-off sentiment in recent trading sessions, traders were in a much more positive mode today on the back of constructive U.S.-China headlines. Market sentiment was then further supported by positive news on car tariffs,” he said.

Trade concessions?

In what may help to calm tensions between China and the U.S., a Canadian court granted bail to senior Huawei executive Meng Wanzhou before her extradition hearing to the U.S. for allegedly violating sanctions on Iran. The U.S. is reportedly considering issuing a warning to U.S. citizens, including business executives, traveling to China amid concerns over retaliation.

Another development that may help to ease traders’ nerves: Bloomberg reported, citing people familiar with the matter, that China was considering a proposal to eliminate the 25 percent surcharge added to U.S.-made cars this year in retaliation for U.S. tariffs on imports from China. That could signal that negotiations in the U.S. trade war may be bearing some fruit.

US political chaos

Fresh U.S. political chaos may keep some traders wary, however.

 

In an unprecedented clash with U.S. Democratic Senator Chuck Schumer and House Democratic Leader Nancy Pelosi in front of cameras, President Trump openly and aggressively threatened to shut down U.S. government finances if he didn’t receive funding for a border wall. During the presidential campaign, Trump had frequently promised Mexico would pay for the wall.

But more generally, traders may not be expecting much from the market in the last trading days of the year.

Alvin Tan, an analyst at Societe Generale, said in a note earlier this week that markets were seeing a “shambolic end to the year.”

“The wheels on risk assets seem to be coming off as we pull up slowly into year-end,” he said. ” Although market volatility did indeed jump this year after the preternatural calmness of 2017, it has more often served to upend crowded trades rather than deepening trends that  traders could exploit.”

Indexes

December futures for Japan’s Nikkei 225 index were down 5 points at 21,340 at 7:32 A.M. SGT, compared with the index’s close at 21,148.02 on Tuesday.

Singapore’s Straits Times Index ended Tuesday down 0.43 percent at 3059.28; December futures for the index were at 3055 at Tuesday’s close, while January and February futures were at 3058 and 3060 respectively.

Hong Kong’s Hang Seng Index added 0.08 percent to 25,771.67 by Tuesday’s close, while China’s CSI 300 was up 0.48 percent at 3159.816.

Malaysia’s KLCI was down 0.64 percent at 1652.63 on Tuesday, while Indonesia’s IDX Composite shed 0.57 percent to 6076.59.

The Dow Jones Industrial Average ended Tuesday down 0.22 percent at 24,370.24, the Nasdaq Composite was up 0.16 percent at 7031.832 and the S&P 500 nudged down 0.04 percent to 2636.78. Futures for the three indexes were a tad lower in early trade.

Oil

Nymex WTI crude oil futures for January were up 0.62 percent at US$51.97 a barrel at 7:18 A.M. SGT, while ICE Brent crude oil futures for February were up 0.38 percent at US$60.20 a barrel at 6:59 A.M. SGT, according to Bloomberg data.

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