Markets Insight

Traders stay on their toes for Trump's next moves

United States President Donald Trump moved to withdraw the US from the Trans-Pacific Partnership trade pact on Day One of his presidency.
United States President Donald Trump moved to withdraw the US from the Trans-Pacific Partnership trade pact on Day One of his presidency.PHOTO: REUTERS

Traders will be scrutinising economic moves by new United States President Donald Trump's administration closely after he adopted a decidedly protectionist tone in his inauguration speech.

As expected, Mr Trump moved to withdraw the US from the Trans-Pacific Partnership trade pact on Day One of his presidency.

Other moves by Mr Trump could affect manufacturing, trade, jobs, defence and foreign policy.

Ahead of the inauguration, stock markets around the world had pulled back from a so-called Trump rally. The Straits Times Index gave back nearly 0.5 per cent last week.

On Wall Street, the Dow Jones Industrial Average snapped a five-day losing streak to close 0.48 per cent higher on Friday - but it came off earlier highs after Mr Trump's speech.

In Singapore, investors will be watching the fourth-quarter and full-year results of M1 tomorrow and Keppel Corp's on Thursday.

"With the earnings downward revision trend still ongoing, a near-term pullback or consolidation is welcome until the trend becomes clearer as the fourth-quarter results season progresses," said DBS Group Research.

RHB maintained a neutral call on M1, citing stronger-than-expected competition from new entrant TPG Telecom. "M1 exhibited the largest revenue-share decline over the past two years, and has the biggest exposure to the domestic market," the brokerage said.

The new trading week will see fourth-quarter economic growth reports from several countries, including the US and Britain, as well as industrial data and inflation-rate figures from Singapore.

But any moves and comments by the newly minted US President are likely to keep hogging the limelight.

So far, Singapore and China have posted growth rates that have beaten consensus forecasts, painting a brighter-than-expected picture for the region.

This week will see Singapore posting December's CPI and industrial production data today and on Thursday respectively.

"While the inflation rate is expected to hold relatively steady at 1.2 per cent year on year, high growth expectations remain for industrial production after the strong records in December manufacturing PMI and non-oil domestic exports," IG Markets strategist Pan Jingyi said.

But economists warned of possible risks from Mr Trump's anti- free-trade stance.

"Any moves towards protectionism would deal a blow to the region's most trade-dependent economies such as Singapore, Taiwan and Vietnam," Capital Economics economist Gareth Leather warned.

Rabobank senior US strategist Philip Marey voiced concerns on the potential impact of Mr Trump's plans. "Increased government spending and lower tax revenues may push up the public-debt trajectory. This could hurt the long-term outlook for the US economy," he told The Financial Times. "What's more, Mr Trump's trade policies could backfire rapidly and undermine the positive impact of his fiscal policy initiatives."

Another overseas event on investors' radar is the British Supreme Court's decision on Brexit proceedings, which will be handed down tomorrow .

On Thursday, Britain is expected to post a resilient fourth-quarter economic growth rate of about 0.5 per cent quarter on quarter despite Brexit concerns.

Local stocks could get a boost from oil prices following the first official meeting of the Opec/non- Opec monitoring committee yesterday. The cartel and Russia said they are ahead of schedule implementing their agreement to curb oil output and boost prices.

A version of this article appeared in the print edition of The Straits Times on January 23, 2017, with the headline 'Traders stay on their toes for Trump's next moves'. Print Edition | Subscribe