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Trump's tariff threats snap streak

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Cautious mood sends the Straits Times Index down 2.98 points, or 0.1 per cent to 3,090.4, with losers beating gainers 192 to 185

Singapore stocks snapped four days of gains yesterday, falling in the face of fresh threats from US president Donald Trump to widen the scope of tariffs on Chinese imports.

The cautious mood sent the Straits Times Index (STI) down 2.98 points, or 0.1 per cent to 3,090.4, with losers beating gainers 192 to 185 on trade of about 1.83 billion shares worth S$1.04 billion.

Most of the other Asian markets showed more resilience. Japan's Topix, propped up by financials and telecoms stocks, rose 0.7 per cent.

Australia's benchmark ASX 200 was up one per cent, from a likely boost by oil price gains.

The exceptions were in China, where the CSI 300 slipped 0.1 per cent, and Hong Kong, with the Hang Seng Index closing lower by about 0.3 per cent.

In an interview with The Wall Street Journal, Mr Trump said that he would likely raise tariffs on US$200 billion in Chinese imports to 25 per cent from the current 10 per cent, just days before his meeting with Chinese president Xi Jinping at the G-20 summit this weekend.

He added that the US would impose tariffs on all remaining imports from China if talks with Mr Xi at the summit were unsuccessful.

"In general, risk sentiment is getting hit with a ton of bricks driven by Trump's hard-line immigration stance threatening the United States Mexico Canada Agreement (USMCA) and then backed up this morning bellicose tariff comments directed at China," said Mr Stephen Innes, head of Asia-Pacific trading at Oanda. "It doesn't sound like we will see Donald the Deal Maker but instead Trump the Trade Warrior at G-20."


Likewise, Phillip Futures investment analyst Samuel Siew said in a note that market sentiments remained jittery on US-China trade relations as there have not been high hopes of a positive outcome from the meeting between Mr Trump and his Chinese counterpart at the G-20.

"Moreover, tariffs had hurt global economic growth forecasts this year. Therefore, should more tariffs be imposed, global indices could face further downside," Mr Siew said.

IG market strategist Pan Jingyi said that the state of consolidation looks set to continue for the rest of the Asia region, such as the likes of the Hang Seng Index and local Straits Times Index, until there is more clarity from the G-20 meeting on US-China trade prospects.

Losses in offshore and oil-linked penny stocks also posed a drag on the Singapore bourse, as Brent crude fell 0.6 per cent overall to US$60.10 a barrel just after Monday's rebound.

Ezion Holdings finished the day down 2.33 per cent to S$0.042 with almost 50 million shares traded, while Rex International shed 2.86 per cent to S$0.068 with 48.69 million shares traded.

Spirits maker Thai Beverage also weighed on the local bourse, declining 5.97 per cent on the day to S$0.63.

ThaiBev had posted weak FY2018 results on Monday night, with profits hampered by the slow Thai economy and rise in product prices. Year to date, the counter has lost some 31.5 per cent.

DBS Group Research analysts have revised their target price for the stock downwards, as they lower their earnings projections for FY2019.

In contrast, all three local banks - index heavyweights - ended the day with gains, providing the STI with some support. DBS closed up 0.47 per cent at S$23.70, UOB gained 0.69 per cent to S$24.80, while OCBC Bank finished 0.54 per cent higher at S$11.13.

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