Global mar­kets ruled by un­cer­tainty

Plans for re­solv­ing US-China trade row set to con­tinue to de­cide mar­ket di­rec­tion

The Straits Times - - BUSINESS - Leila Lai

In the trade spat be­tween the United States and China, the only cer­tainty seems to be un­cer­tainty, given the con­flict­ing mes­sages from Wash­ing­ton about its plans to re­solve the con­flict.

Global mar­kets perked up to­wards the end of last week when news broke on Thurs­day that US Trea­sury Sec­re­tary Steven Mnuchin had ex­tended an in­vi­ta­tion to Chi­nese of­fi­cials to restart trade talks.

How­ever, hopes for a fruit­ful ses­sion were un­der­mined by Pres­i­dent Don­ald Trump’s tweet later the same day that the US had the up­per hand in the talks and was “un­der no pres­sure to make a deal”.

Wall Street pared gains just be­fore clos­ing on Fri­day, fol­low­ing a Bloomberg re­port that Mr Trump had in­structed aides to go ahead with the next round of tar­iffs on US$200 bil­lion (S$275 bil­lion) of Chi­nese goods.

The Dow Jones In­dus­trial Av­er­age rose 0.03 per cent to 26,154.67 and the S&P 500 added 0.03 per cent to 2,905.01, while the Nas­daq Com­pos­ite dropped 0.05 per cent to 8,010.04.

The Dow was 0.9 per cent ahead for the week, the S&P 500 was up 1.2 per cent, and the Nas­daq 1.4 per cent higher.

“The suc­cess of trade talks in the later part of Septem­ber re­mains a ques­tion, par­tic­u­larly with the hard stance that Pres­i­dent Don­ald Trump con­tin­ues to hold de­spite the of­fer for talks,” said IG mar­ket strate­gist Pan Jingyi.

“The flop­ping of past talks in re­cent mem­ory would make one cog­nisant of the height­ened volatil­ity we could still be see­ing from the os­cil­lat­ing sen­ti­ment sur­round­ing this item. With this back­drop, look to de­vel­op­ments on the for­mu­la­tion of th­ese talks to help drive the mar­kets.”

Sev­eral coun­tries are deal­ing with the af­ter­math of se­vere storms that hit over the week­end.

Florence, a Cat­e­gory 1 hur­ri­cane, ripped into the Carolina coast in the US over the week­end, caus­ing cat­a­strophic floods and leav­ing at least 12 peo­ple dead.

Catas­tro­phe mod­eller Risk Man­age­ment So­lu­tions told Bloomberg that the hur­ri­cane, which was down­graded to a trop­i­cal storm, may cause US$15 bil­lion to US$20 bil­lion in losses for in­sur­ance com­pa­nies, not in­clud­ing the po­ten­tial cost of in­land flood­ing. Other es­ti­mates put the to­tal cost of the dam­age at US$27 bil­lion.

Closer to home, Su­per Typhoon Mangkhut made land­fall in the Philip­pines on Satur­day with winds of up to 269kmh be­fore con­tin­u­ing on to Hong Kong and China’s Guang­dong coast­line yes­ter­day.

Mr Chuck Wat­son, a dis­as­ter mod­eller at Enki Re­search in the US, told Bloomberg at the week­end that the typhoon could cause the Philip­pines eco­nomic losses of 6.6 per cent of gross do­mes­tic prod­uct, or more than US$20 bil­lion. He ex­pects Mangkhut to cause about US$50 bil­lion in eco­nomic losses in main­land China and Hong Kong.

The Fed­eral Re­serve Board has en­tered its black­out pe­riod ahead of its Fed­eral Open Mar­ket Com­mit­tee meet­ing on Sept 25 and Sept 26.

Up­com­ing US data this week in­cludes hous­ing fig­ures and the Markit man­u­fac­tur­ing and ser­vices pur­chas­ing man­agers’ in­dex on Fri­day.

There will be key numbers out in the re­gion as well, in­clud­ing Sin­ga­pore’s non-oil do­mes­tic ex­ports for Au­gust and In­done­sia’s Au­gust trade numbers to­day, Aus­tralia’s sec­ond-quar­ter house prices to­mor­row and Malaysia’s con­sumer price in­dex numbers for Au­gust on Wed­nes­day.

PHO­TOS: AGENCE FRANCE-PRESSE

Work­ers at a swimwear fac­tory in Jin­jiang in China’s eastern Fu­jian prov­ince. Wall Street pared gains just be­fore clos­ing last Fri­day, fol­low­ing a Bloomberg re­port that US Pres­i­dent Don­ald Trump had in­structed aides to go ahead with the next round of tar­iffs on US$200 bil­lion (S$275 bil­lion) of Chi­nese goods.

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