Markets Insights

Global markets ruled by uncertainty

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 tari
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.PHOTOS: AGENCE FRANCE-PRESSE
A firefighter holding on to two nursing home patients during the evacuation of a nursing home amid rising floodwaters last Saturday in Lumberton, North Carolina, after Hurricane Florence ripped into the Carolina coast. The hurricane may cause up to US$20
A firefighter holding on to two nursing home patients during the evacuation of a nursing home amid rising floodwaters last Saturday in Lumberton, North Carolina, after Hurricane Florence ripped into the Carolina coast. The hurricane may cause up to US$20 billion in losses for insurance firms, not including the potential cost of inland flooding, according to Risk Management Solutions.PHOTOS: AGENCE FRANCE-PRESSE

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

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.

KEY MARKET DRIVER

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.

IG MARKET STRATEGIST PAN JINGYI, on US-China trade talks.

"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.

A version of this article appeared in the print edition of The Straits Times on September 17, 2018, with the headline 'Global markets ruled by uncertainty'. Print Edition | Subscribe