Singapore market trends Tuesday: Markets appear to fear the Fed

Singapore CBDSingapore CBD

Asian markets looked set for a tumble on Tuesday amid a wall of worries, including what the U.S. Federal Reserve will telegraph to the market at its meeting later this week. Wall Street’s tumble on Monday and early declines Tuesday in Japan’s and South Korea’s markets offered negative cues.

“Most wonderful time of the year it is not if you own stocks,” Chris Rupkey, chief financial economist at MUFG Union Bank, said in a note on Monday U.S. time.

“There isn’t any thinking going on, there’s just selling in illiquid year-end markets,” Rupkey said.

Indeed, he noted that while Federal Reserve interest rate hikes were tipped as the reason stocks fell in early October, the Fed’s newfound apparent reluctance to hike much further appears to be sending stocks ever lower.

“For all we know, investors will be suspicious if the Fed backs off its gradual pace of rate hikes at Wednesday’s meeting because it might indicate policy officials are worried about the economic growth outlook,” he said.

But Rupkey also pointed to a wall of worries, from the investigations into Russia’s interference in the U.S. election and over U.S. President Trump, fears Obamacare will be ended, fears the U.S. federal government will shutdown later this week, Trump tweets over the Fed, Brexit and a drop in oil prices.

Indexes

Japan’s Nikkei 225 index dropped 1.54 percent in early trade, while South Korea’s Kospi index opened down 0.66 percent.

Singapore’s Straits Times Index rose 1.21 percent to 3114.25 on Monday; December futures for the index were at 3109 on Monday, while January and February futures were at 3112 and 3114 respectively.

Hong Kong’s Hang Seng Index shed 0.03 percent to 26,087.98 on Monday, while China’s CSI 300 was down 0.15 percent at 3161.197.

Malaysia’s KLCI index fell 1.22 percent to 1641.62 on Monday, while Indonesia’s IDX Composite lost 1.31 percent to 6089.30.

The Dow Jones Industrial Average tumbled 2.11 percent to 23,592.98, the Nasdaq Composite dropped 2.27 percent to 6753.73 and the S&P 500 lost 2.08 percent to 2545.94. Futures for the three indexes were higher in early trade.

Oil

Nymex WTI crude oil futures for January were down 1.20 percent at US$49.28 a barrel at 7:50 A.M. SGT, while ICE Brent crude oil futures for February were off 1.11 percent at US$59.61 a barrel at 6:59 A.M. SGT, according to Bloomberg data.

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