Bulls And Bears

Regional markets hit by Wall Street sell-off

STI joins key Asian bourses in the red on concerns about US economy

US President Donald Trump's trade war truce claims and his administration's conflicting signals were not the only factors to have played into Wall Street's sell-off on Tuesday.

Another had to do with an inversion of a segment of the US Treasury yield curve, a measure viewed as an early indicator of a potential economic recession.

All these played into a lacklustre session for Asian markets.

"Revamped trade uncertainties and a surprising inversion of part of the US Treasury yield curve catalysed panic selling in US equities," said CMC Markets analyst Margaret Yang.

But she added: "It is probably too early to price in that scenario as US fundamental metrics are still strong and the jobs market is tight."

That said, investors' worries appeared somewhat quelled on news yesterday that Beijing aims to address issues promptly where it has a consensus with Washington and will press on with trade negotiations within the 90-day truce period. This sent US equity futures higher at press time.

The Straits Times Index (STI) closed 11.87 points, or 0.37 per cent, lower at 3,155.92. Of the 30 STI constituents, 16 counters ended in the red. Turnover stood at 1.26 billion shares worth $873 million. Decliners outnumbered gainers 248 to 130.

The usually thinly traded catalist-listed Disa was the bourse's most actively traded stock on a turnover of 78.1 million shares. It traded flat at 0.4 cent.

ThaiBev was the most active index-listed stock and also the biggest loser in percentage terms, closing 2.4 per cent lower at 61 cents on a turnover of 34.1 million shares.

The STI's biggest loser in dollar terms - Jardine Cycle & Carriage - slipped 1.1 per cent to $35.61. Jardine Matheson Holdings was the biggest gainer in dollar terms, closing 0.1 per cent higher at US$66.90.

DBS closed 1.2 per cent lower at $24.65, OCBC dropped 0.5 per cent to $11.49, and UOB lost 0.2 per cent to end at $25.74.

Key Asian indexes were in the red with the Nikkei, Hang Seng, Shanghai Composite, ASX 200, Kospi and Kuala Lumpur Composite all ending lower.

Ms Yang maintained that Asian markets exhibited resilience against the US turmoil, saying: "They are cushioned by relatively cheap valuation and updates on China's response on trade commitments helped to lift sentiment."

United States markets were closed yesterday in honour of former president George H.W. Bush, who died last week.

A version of this article appeared in the print edition of The Straits Times on December 06, 2018, with the headline 'Regional markets hit by Wall Street sell-off'. Print Edition | Subscribe