Bulls And Bears

Regional markets up as trade-war fears recede

Investors cheered by US pushback against Trump's planned tariffs

A pushback by Republicans against US President Donald Trump's planned tariffs on steel and aluminium lifted Wall Street overnight and gave regional markets some relief yesterday in the process.

US House Speaker Paul Ryan urged the administration not to finalise the tariffs, citing risks to the economy - comments that lifted the Dow Jones Industrial Average by 1.37 per cent.

That jump on Wall Street was mirrored here, with the Straits Times Index (STI) adding 53.31 points, or 1.55 per cent, to 3,491.92.

Around 2.3 billion shares worth $1.5 billion changed hands, with 284 gainers to 150 losers.

Elsewhere, Hong Kong shares rose 2.1 per cent, the Nikkei was up 1.8 per cent, and Shanghai was ahead 1 per cent.

Local investors were cheered by talk that the threat of a trade war has receded significantly in the wake of US opposition to the tariffs.

"Given the overwhelmingly negative response from industry leaders and international financial markets, and even the furious backlash from loyal members of Mr Trump's administration, there is growing optimism that perhaps significant exemptions will be forthcoming," said Mr Stephen Innes, head of Asia-Pacific trade at Oanda.

Credit Suisse expects China's response to be restrained, given that it has more to lose from a rise of protectionism and a fall in global trade.

Maybank Kim Eng said the STI is poised for a further correction in the near term, "(but) as the longer-term trend is still positive, we believe 'buy' on weakness is a good strategy".

There were also concerns closer to home for investors to focus on yesterday. CGS-CIMB warned that fourth-quarter results here were not impressive, with more disappointments than surprises. The broker likes Sembcorp Marine, Venture Corp, UOL, Genting Singapore and Singapore Technologies Engineering, with AEM, China Sunsine, Yongnam and mm2 among its small-cap picks.

SembMarine rose 11 cents to $2.01 yesterday, a rise of almost 6 per cent amid trade of more than 27 million shares.

The rig builder was boosted by a DBS Group Research report that suggested the firm could be in line for a big contract win, which would be its first major deal for this year.

AEM Holdings, which provides test solutions to advanced manufacturers, got a lift after some analysts called a "buy" on the stock. It closed at $7.54, up 99 cents, or 15 per cent.

CGS-CIMB, which has an "add" call on AEM, believes the company is making good progress with its key customer and could raise its guidance as the year progresses.

A version of this article appeared in the print edition of The Straits Times on March 07, 2018, with the headline 'Regional markets up as trade-war fears recede'. Print Edition | Subscribe