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Straits Times 3,301.25 -3.02 -0.09%
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Rollercoaster Ride As Trade Worries Persist
Singapore Market Commentary | 07 September 2018
By: meisiew
Articles (9) Profile

Over the past fortnight, the US and Mexico struck a trade deal to send Nasdaq and S&P 500 to fresh all-time highs while Dow Jones Industrial average rose above 26,000 for the first time since January. However, optimism faded after President Donald Trump threatened to exclude Canada out of the final pact.

Further weighing on the markets, Trump’s administration reportedly hinted to a fresh round of tariffs on US$200 billion of Chinese imports as soon as 7 September 2018. The Dow ended the fortnight at 25,995.87, inching up only 1.3 percent while S&P 500 rose 0.7 percent to close at 2,878.05. Meanwhile, Nasdaq rose 0.7 percent to close at 7,922.73.

Asian markets also surrendered early gains and dipped further down, with investors fixed firmly on trade risks. Japan’s Nikkei 225 was down 1.3 percent to close at 22,307.06, with its automakers impacted by concerns arising from the strongest typhoon experienced in 25 years. Hong Kong’s Hang Seng index was not spared and fell 2.5 percent to close at 26,975 while the Shanghai Securities Exchange Composite closed fell one percent to 2,702.30.

Despite the ongoing trade concerns, MAS maintain its Singapore’s growth forecast at 3.2 percent this year and 2.7 percent in 2019. In August 2018, manufacturing sector grew 0.3 point with the local Purchasing Managers’ Index (PMI) standing at 52.6, reversing from the declining trend of the past four months. The higher reading was attributed to growth in new orders and exports. Factory employment recorded its 12th consecutive month of expansion. MAS projected the manufacturing sector to grow 7.6 percent this year.

Over the local front, Facebook announced that it will build a $1.4 billion data centre in Singapore, its first highly-advanced facility in Asia and its 15th data centre in the world. The centre is hundred percent powered by renewable energy and targeted to start operations in 2022.

In the same period, local benchmark Straits Times Index (STI) closed lower 2.4 percent, closing firmly below the 3,200-point critical psychological level at 3,134.39. Despite that, share repurchase in August reached a 35-month high with 43.6 million shares totaling $245.4 million were repurchased. Starting the third quarter in the red, the STI has lost 7.9 percent since the beginning of the year.

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