Asia market trends Monday: US shutdown, Brexit worries may stall recovery

Stock ticker at SGX building on Shenton Way; taken October 2018.Stock ticker at SGX building.

Shares around the region may stumble on Monday, tracking a trading hiccup on Wall Street on Friday, as geopolitical worries weighed on sentiment, potentially ending a recovery from December’s rout.

Stephen Innes, head of Asia Pacific trade at OANDA, said that declines on Wall Street amounted to a mild bout of risk aversion, with only general concerns over Brexit and the longest-ever U.S. government shutdown driving markets.

S&P estimates it has already cost the U.S. economy US$3.6 billion.

Other analysts also pointed to some reasons for pessimism in the near term.

“Global growth could still slow further in the short term and there are a bunch of issues coming up that could trip up markets including U.S.,” Shane Oliver, head of investment strategy and chief economist at AMP Capital, said in a note over the weekend. “December quarter profit results, trade negotiations, the U.S. government shutdown, the need to raise the U.S. debt ceiling, [Special Counsel Robert Mueller’s investigation of Russian interference in the 2016 elections], Brexit uncertainties, the Australian election, etc.”

But Oliver said he wasn’t expecting to see a U.S. or global recession anytime soon, and he forecast shares would see “decent gains” this year, on more policy stimulus in China and Europe and with expectations the U.S. Federal Reserve would pause its rate-hiking cycle.

Indexes

Futures for Japan’s Nikkei 225 index were at 20,220, down 85 points at 7:38 A.M. SGT, according to CME data; that compares with the index’s close at 20,359.70, up 0.97 percent, on Friday.

Singapore’s Straits Times Index rose 0.48 percent to 3198.65 on Friday; January futures for the index were at 3198 on Friday, while February and March futures were at 3201 and 3198 respectively. In a note on Friday, DBS tipped resistance for the index at 3220, with support at 3070, followed by 3000.

Hong Kong’s Hang Seng Index added 0.55 percent to 26,667.27 on Friday, while China’s CSI 300 rose 0.72 percent to 3094.778.

Malaysia’s KLCI ended Friday up 0.26 percent at 1683.22, while Indonesia’s IDX Composite gained 0.52 percent to 6361.46.

The Dow Jones Industrial Average edged down 0.03 percent to 23,995.95, the Nasdaq Composite shed 0.21 percent to 6971.476 and the S&P 500 nudged down 0.02 percent to 2596.26. Futures for the three indexes were lower in early trade.

Oil

Nymex WTI crude oil futures for February were up 0.60 percent at US$51.90 a barrel at 7:28 A.M. SGT, while ICE Brent crude oil futures for March were up 0.60 percent at US$60.84 a barrel at 7:27 A.M. SGT, according to Bloomberg data.

 

Get the Shenton Wire morning briefing in your inbox