Singapore market trends Thursday: US trade war tensions show signs of easing

Singapore container portSingapore’s container port

Singapore shares may extend their rally at Thursday’s open, tracking Wall Street’s gains on Wednesday as sentiment got a boost from signs of thawing in the U.S. trade war on China.

“Any de-escalation of trade war is viewed favourably from a global growth perspective,” Stephen Innes, head of Asia Pacific trading at OANDA, said in a note on Wednesday.

China reportedly is revamping or de-emphasizing its “Made in China 2025” program to offer more market access for foreign companies, with the Wall Street Journal reporting China is planning to provide foreign companies greater access to its markets.

The market may also be re-assessing its view of U.S. President Trump’s tantrum earlier this week threatening to shutdown the government’s finances.

US government shutdown threat losing teeth?

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.

“Markets grossly over-reacted to President Trump’s threat to shut down the U.S. government by wiping out [Tuesday] morning’s stock market gain,” Scotiabank said in a note on Wednesday.

Scotiabank noted that many previous issues causing U.S. government shutdowns are no longer in play.

“Only roughly one-quarter of government funding at risk given prior spending and appropriations bills which is a fraction of the spending at risk going into other historical shut downs,” it said.

In addition, the debt ceiling is no longer being binding, with the Treasury still able to continue debt auctions, and Congress can use continuing resolutions for funding while negotiating, Scotiabank said.

And as a “bonus” reason, Scotiabank added, “perhaps only President Scrooge would shut down the government days before Christmas.”

Indexes

December futures for Japan’s Nikkei 225 index were up 60 points at 21,705 at 7:35 A.M. SGT, compared with the index’s close at 21,602.75 on Wednesday.

Singapore’s Straits Times Index ended Wednesday up 1.33 percent at 3099.99; December futures for the index were at 3096 on Wednesday, while January and February futures were at 3099 and 3101.

Hong Kong’s Hang Seng Index rose 1.61 percent to 26,186.711 on Wednesday, while China’s CSI 300 gained 2.15 percent to 3170.609.

Malaysia’s KLCI index rose 0.64 percent to 1663.27 on Wednesday, while Indonesia’s IDX Composite added 0.64 percent to 6115.58.

The Dow Jones Industrial Average advanced 0.64 percent to end at 24,527.27 on Wednesday, the Nasdaq Composite gained 0.95 percent to 7098.312 and the S&P 500 rose 0.54 percent to 2651.07. Futures for the three indexes were slightly higher in early trade.

Oil

Nymex WTI crude oil futures for January were up 0.41 percent at US$51.36 a barrel at 7:30 A.M. SGT, while ICE Brent crude futures for February were down 0.08 percent at US$60.15 a barrel at 6:57 A.M. SGT, according to Bloomberg data.

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