Markets insights

All eyes on trade as tariff deadline looms

Investor appetite hinging on US-China deal; Asia markets releasing data through the week

With the Dec 15 deadline for the United States to slap additional tariffs on US$160 billion (S$218 billion) of Chinese imports looming, investors no doubt are keeping their eyes peeled for developments on the US-China trade front.

This has been the case for much of the past 11/2 months, during which sentiment in the markets has risen and fallen with headlines of progress, or the lack of it, of a "phase one" trade deal between the two giant economies.

While there is still no confirmation on when the interim agreement will be signed, or concrete details of what will be covered, US President Donald Trump and Treasury Secretary Steven Mnuchin have acknowledged that the progress has been encouraging.

FXTM market analyst Han Tan said: "Further signs of an imminent 'phase one' trade deal could translate into further gains for risk assets. However, should investors get the sense that more trade tariffs are on the horizon, that could deal a significant blow to risk appetite."

Serving as a reminder of the importance of having a trade agreement in place before the year end, Chinese export figures for last month released yesterday were disappointing, falling for the fourth straight month, instead of rising as analysts had predicted.

Last Friday, Singapore's benchmark Straits Times Index extended gains from Thursday, closing the week at 3,194.71, up 20.52 points, or 0.7 per cent.

The week saw the blue-chip index edge up just 0.79 point from Nov 29's close of 3,193.92.

This week, the local economic docket is relatively light. Foreign reserves data for last month will be released today. Retail sales data for October is due on Thursday.

According to a Bloomberg poll, retail sales is expected to increase 1.6 per cent month on month, which translates to a smaller decline of 1 per cent year on year, said United Overseas Bank (UOB) economist Alvin Liew.

Elsewhere in Asia, Taiwan's trade data for last month will be out today. Tomorrow, the Philippines will release its October trade figures, while China will publish its inflation data for last month.

Malaysia and India will on Thursday release their industrial production data for October.

In Japan, the economy's second print of third-quarter gross domestic product will be released today, while industrial production figures for October will be out on Friday.

Among regional central banks, the Bangko Sentral ng Pilipinas is the only one with a monetary policy decision to make.

UOB's Mr Liew noted that the Philippine central bank is widely expected to keep its policy rates unchanged in its last policy decision for this year.

A version of this article appeared in the print edition of The Straits Times on December 09, 2019, with the headline 'All eyes on trade as tariff deadline looms'. Print Edition | Subscribe