Business

Geopolitical issues to dictate trading mood

Turkish lira, Russian rouble plunge due to Washington's tariffs, sanctions; Wall Street affected by geopolitical concerns

For much of last week, markets were in a state of flux as US-China trade tensions continued to be a main concern despite a largely positive earnings season for US-listed companies.

Mr Jameel Ahmad, the global head of currency strategy and market research at FXTM, said: "With the continuous news flow dominating the financial markets around both geopolitical tensions, and also the prolonged trade war narrative, it is very much possible that investors will continue to adopt a guarded approach towards riskier assets over the week."

Market strategist at IG Asia Pan Jingyi added that aggravation from both political and economic concerns in Russia and Turkey respectively, weighed on markets at the end of the week.

"Into the fresh week, it will likely be another one watching economic indicators while the influence of geopolitics on markets remain commonplace," she said.

The Turkish lira slipped further after US President Donald Trump doubled tariffs on Turkish exports of steel and aluminium, leaving investors running for safe-haven assets, and subsequently pushing the US dollar higher.

The rouble took the biggest plunge since 2015, as Washington pledged new sanctions against Russia over a recent nerve-agent attack on a former spy and his daughter in the UK.

Mr Ahmad said: "From the standpoint of the Singapore dollar, the US dollar is still viewed as mostly supported from investors and this means a strengthening greenback could pressure the Singapore dollar this week."

Wall Street dipped on Friday, due in part to the unfolding economic crisis in Turkey which dragged down financials, and riskier assets.

This led major US banks like Citigroup, JPMorgan, Wells Fargo and Bank of America to close lower.

Among the main indices, the Dow Jones Industrial Average fell 196.09 points, or 0.77 per cent, to 25,313.14; the S&P 500 lost 20.3 points, or 0.71 per cent, to 2,833.28; and the Nasdaq Composite dropped 52.67 points, or 0.67 per cent, to 7,839.11.

Into the fresh week, it will likely be another one watching economic indicators while the influence of geopolitics on markets remain commonplace. IG Asia market strategist Pan Jingyi

For the week, the Dow and S&P 500 posted declines after five straight weeks of gains.

Meanwhile, the Nasdaq rose 0.3 per cent for the week on strong gains in technology shares. Following its decline over the week, the S&P 500 closed at 1.4 per cent below its Jan 26 record high.

A slew of key US economic data is due for release this week. This include tomorrow's release of import and export prices for last month and US retail sales and industrial production numbers on Wednesday.

In Europe, Q2 gross domestic product data and July inflation numbers are set to appear in the week.

In Asia, the key economic data scheduled for release this week include China's July industrial production, fixed asset investments and retail sales figures.

Ms Pan said: "July's industrial production is currently seen to accelerate to 6.3 per cent year-on-year while retail sales and fixed asset investments are expected to hold their June growth rates. Watch any disappointments here which may aggravate concerns across Asian markets."

A central bank meeting in Indonesia is expected on Wednesday, but no changes in its monetary policy are likely. Malaysia is also set to reveal Q2 GDP figures this week.

In Singapore, the benchmark Straits Times Index (STI) dropped 1.3 per cent, or 41.96 points, last Friday to close at 3,284.78.

Key indicators due for release this week in Singapore include Q2 GDP numbers today and July trade figures on Friday.

For full listings of SGX prices, go to http://btd.sg/BTmkts

BUSINESS & FINANCE