More volatility in store for markets amid US-China tariff war, Gaza tensions

SINGAPORE – Markets were volatile last week as the US implemented a 10 per cent tariff on all Chinese imports starting on Feb 4, prompting China to retaliate with duties ranging from 10 per cent to 15 per cent on key US imports.

Tensions escalated further when US President Donald Trump suggested at a Feb 4 press conference

that the US might take long-term control of the Gaza Strip

and develop it into the “Riviera of the Middle East”.

This uncertainty fuelled a surge in gold prices, with spot gold reaching a record high of US$2,880 per ounce on Feb 4, while gold futures surpassed US$2,900 per ounce. Analysts The Straits Times spoke to forecast gold could hit US$3,000 per ounce by the end of 2025.

Bitcoin also saw sharp fluctuations, climbing from around US$92,000 per coin on Feb 3 to US$102,000 on Feb 4, before settling at about US$97,000 by the week’s end.

Crypto is up just 3 per cent year to date compared with gold’s 9 per cent rise, but it has more room to grow as access to cryptocurrencies

improves under the Trump administration,

according to one analyst. Prices could reach US$200,000 by the year end and US$500,000 by 2028, said Standard Chartered’s head of crypto research Geoff Kendrick.

Amid the market turmoil, the benchmark Straits Times Index

closed the week above the 3,860 mark,

finishing higher as Singapore-listed firms kicked off their reporting season for the period ending Dec 31, 2024.

Profits up for Keppel, SGX

Shares of Singapore Exchange (SGX) jumped by more than 10 per cent to close on Feb 7 at $13.99 after reporting a

20.7 per cent year-on-year rise in net profit

to $340 million for the first half-year ended December 2024. This was driven by strong revenues from the derivatives and cash equities business.

Listing revenues were down, though, with the number of initial public offerings (IPO) on the SGX

at its lowest level in more than a decade.

Just four companies came to market in Singapore in 2024.

The exchange said investor confidence is returning and that there is a good pipeline of companies in the technology, healthcare and consumer sectors interested in listing here. It expects more IPOs in 2025 compared with in 2024, but did not provide updates on the progress of a review group set up last August to revive listings on the bourse.

Rig builder turned asset manager Keppel

saw a 19.9 per cent rise in profit

from continuing operations for the second half of 2024, reaching $527.9 million from $440.3 million a year ago. It said all three business divisions – property, infrastructure and connectivity – were profitable.

Data centres, under its connectivity segment, are Keppel’s hottest business now, driven by demand for digitalisation and artificial intelligence (AI), it said.

Despite the rising significance of

Chinese AI start-up DeepSeek,

which has developed a large language model at a fraction of the cost of OpenAI’s ChatGPT, Keppel said it expects demand for data centres to grow as higher efficiencies and lower costs spur more AI innovations in the industry. Shares of Keppel closed on Feb 7 at $6.79, up 1.2 per cent through the week.

Property resilience

In its latest business update issued after the market closed on Feb 7, Frasers Property noted that Singapore’s residential market remains resilient, driven by its strong home ownership and investment appeal.

The Orie – its 777-unit Toa Payoh joint condominium development with City Developments and Sekisui House –

sold 86 per cent of its residential units

at an average price of $2,704 per sq ft at its launch weekend on Jan 20.

The developer also

plans to launch a new mixed-development project

comprising 348 luxury residential units in 2025 through the redevelopment of Robertson Walk and Fraser Place Robertson Walk.

Frasers Property registered $1 billion in pre-sold revenue across Singapore, Australia, Thailand and China as at Dec 31, 2024, it revealed in its business update.

Meanwhile, CapitaLand Integrated Commercial Trust (CICT) earlier in the week reported a 6.4 per cent year-over-year rise in distributable income totalling $385.7 million for the second half of 2024, thanks to maiden contributions from Ion Orchard, in which it had acquired

a 50 per cent stake

in September 2024.

However, distribution per unit, or dividends, of 5.45 cents was flat, owing to a larger unit holder base following CICT’s equity fund raising for Ion Orchard.

Its shares closed at $1.98, up 2.6 per cent through the week.

Losses for some

Not every company reported good results, though.

Japan Foods, which franchises brands like Ajisen Ramen and has self-developed brands such as Tokyo Shokudo, Fruit Paradise and Milan Shokudo,

reported a loss of $2.9 million

for the nine months till Dec 31, 2024, as expenses outweighed revenues.

Officials told The Straits Times on Feb 6 that it may close more eateries to streamline operations and manage costs. It has already cut the number of its outlets from 84 to 82 at the end of 2024.

It added that the food and beverage industry in Singapore has been affected by the strong local currency, which has encouraged more Singaporeans to travel and spend overseas in countries like Japan.

Meanwhile, home-grown electronics company Creative Technology saw its net loss widen to US$6.1 million (S$8.27 million) for its first half of the year ended Dec 31, 2024, from US$4.1 million over the same period in 2023.

This was despite net sales for the half-year period rising 18 per cent to US$37.4 million, from US$31.8 million in the corresponding period in the prior year, primarily due to higher revenue from new speaker products, the company said on Feb 7. Creative also spent more on marketing and research and development, leading to higher expenses.

What to look out for

More volatility could be in store for markets this week.

US Federal Reserve chairman Jerome Powell is due to testify before Congress on Feb 11 and 12, providing a broad overview of the economy and monetary policy, and markets will be watching out for clues on where interest rates are headed.

The Fed in January

decided to keep interest rates steady

at 4.25 per cent to 4.5 per cent, with Mr Powell emphasising that there is no rush to adjust rates.

Typically, stock markets tend to decline when the Fed takes a hawkish stance and hikes interest rates. Conversely, a dovish monetary policy stance could boost equities.

The US will also be announcing a slew of key economic data across the week. Inflation data for the month of January will be out on Feb 12, followed by producer prices on Feb 13, and retail sales numbers on Feb 14.

In Singapore, DBS Bank will announce its results for 2024 before the market opens on Feb 10. Analysts will likely be watching for the impact of lower interest rates in the fourth quarter of 2024, and recent signs of overall loan growth in Singapore.

Capital management initiatives by the banks, such as dividend policies and buybacks, are also being closely watched. DBS shares closed at $44.68 on Feb 7, up by over 1 per cent during the week.

Data centre real estate investment trust Digital Core Reit and financial services firm iFast will report on Feb 12.