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Market confidence falls as doubts grow

This article is more than 12 months old

Inconsistent messages from US leads to 'volatile price action'

Monday's rally on Asian equity benchmarks, driven by the positive sentiment surrounding the trade truce between the US and China, was partially reversed yesterday.

Market confidence remained fickle and investors' spirits faded amid growing doubts. This was helped in no part by conflicting information received from top ranking officials in the Trump administration.

Through Twitter, US President Donald Trump said China had agreed to reduce and remove tariffs on cars from the US, but both Treasury Secretary Steven Mnuchin and economic adviser Larry Kudlow were not able to confirm the news.

FXTM chief market strategist Hussein Sayed said: "Such inconsistent messages will leave markets guessing and struggling to reach a conclusion, thus leading to volatile price action in financial assets."

CMC market analyst Margaret Yang said: "Nuanced divergence between the two country's official statements on the G-20 outcome led the market to believe the trade negotiation is probably not going to be smooth sailing."

Ms Yang said this dampens the outlook of a major breakthrough in trade relationships and raises concerns about a revamp in tariffs. This is also likely to suppress risk appetite.

She said the market focus has shifted back to fundamental metrics, with recent purchasing managers index figures suggesting global demand is weakening.

Asian markets mostly closed lower, with the exception of the Hang Seng and Shanghai Composite Index, which closed 0.29 per cent and 0.42 per cent higher respectively.

The Nikkei, ASX 200, Kospi and Kuala Lumpur Composite ended lower.

In Singapore, the Straits Times Index (STI) closed 22.83 points or 0.7 per cent lower at 3,167.79. Of the 30 STI constituents, four counters ended the day in the black while another four closed level.

Turnover on the bourse stood at roughly 1.49 billion shares worth $1 billion, which worked out to an average unit price of 67 cents a share. Decliners outnumbered advancers 281 to 108.

On a turnover of 76 million shares, Thomson Medical Group was the bourse's most actively traded stock. It traded flat on the day at $0.082.

Genting Singapore was the most active index-listed stock, closing two cents or 1.9 per cent lower at $1.02 with a turnover of 38.6 million shares.

Singapore Airlines was the STI's biggest gainer on the day, closing four cents or 0.4 per cent higher at $9.56.

The STI's biggest loser in dollar terms - Jardine Strategic Holdings - slipped 55 US cents (75 Singapore cents) or 1.4 per cent at US$38.60.

Yangzijiang Shipbuilding reversed gains made on Monday to close six cents or 4.6 per cent lower at $1.24.

Among financials, DBS Bank closed 15 cents or 0.6 per cent down at $24.96, OCBC Bank dropped five cents or 0.4 per cent to $11.55, and United Overseas Bank lost 20 cents or 0.8 per cent to close at $25.78.

ComfortDelGro's share price continued to slide with the impending entry of Indonesia-based ride-hailing company Gojek to Singapore this week.

ComfortDelGro shares closed three cents or 1.4 per cent lower at $2.12.

On the recent selloff, KGI Securities' Joel Ng said in a note it might have been overdone given the transport operator's strong balance sheet and healthy recurring cash flows.

IG sales trader Jayden Loh said: "Until we have clarity on the trade deals, markets would be volatile and quick to react to any major updates coming from both countries. As we head into the festive season where volumes tend to be lower, we might see even more erratic movements for the coming weeks."

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