STI falls 1.2% as trade war fears resurface

Resignation of Mr Gary Cohn, Mr Trump's top economic adviser, is sign of defeat for pro-free crowd

One day up, the next day down. What's clear as forewarned is that the stock market is likely to rise and fall in tandem with US interest rate hike speculation and trade rhetoric. Investors, who have been phlegmatic about the drama in the White House, can no longer ignore it.

Singapore's stock market, along with its Asian peers, were jolted yesterday by news that US President Donald Trump's top economic adviser Gary Cohn had resigned.

The resignation of Mr Cohn, nicknamed "Globalist Gary", rekindled concerns over Mr Trump's decision to impose punishing tariffs of 25 per cent on steel and 10 per cent on aluminium as part of his "America First" agenda.

Mr Cohn was the last powerful voice in the Oval Office arguing against the tariffs and against Mr Trump's threats to break up the North American Free Trade Agreement. His departure is a sign of defeat for the pro-free trade crowd.

"His resignation increased the risk tenfold that President Trump will follow through with far-reaching trade tariffs, given that Cohn was said to be remaining in his role to convince Trump to reverse his trade policy views, or at least temper them," said Mr Stephen Innes, head of Asia-Pacific trading at OANDA.

The US market was closed when the news of Mr Cohn's imminent departure broke, but traders sent the Dow futures - a predictor of where the market will open - tumbling.

S&P 500 futures dropped more than 1 per cent and set the downbeat tone for Asia. MSCI's broadest index of Asia-Pacific shares outside Japan also eased.

The prospect of increased protectionism overshadowed developments on North Korea, which has indicated a willingness to discuss denuclearisation with the US. The news sent South Korea's Kospi stock index up.

Experts at DBS Group Research said all eyes will be on the Federal Reserve, which will release its Beige Book.

The Beige Book presents a summary of economic conditions and activity based on reports from the various Fed district banks. Hence, it provides an early glimpse into what can be expected at the Federal Open Market Committee's (FOMC) next meeting on March 20 to 21.

Mr Oriano Lizza, sales trader at CMC Markets, warned: "Investors must not take their eye off the ball though, as the upcoming FOMC meeting approaches. The CME's Fed Watch tool predicts a 87 per cent chance of a rate hike and investors should potentially foresee early pricing into the markets, which could lift Treasury yields and initiate a sell-off."

In Singapore, after opening at 3,467.75, the benchmark Straits Times Index (STI) closed at 3,450.69, down 41.23 points, or 1.18 per cent, from Tuesday's close. More than 2.6 billion shares, worth $1.5 billion, were traded. There were 155 gainers to 309 losers.

Yoma Strategic rose 4 per cent to hit $0.445, before settling at $0.425, up half a Singapore cent, or 1.19 per cent, from the previous day's close.

Analysts liked its planned acquisition of a 34 per cent stake in Digital Wave Money Myanmar. The latter offers mobile payment solutions and services (remittance and e-wallet) in Myanmar.

It is the first licenced provider under Myanmar's Mobile Financial Services Regulation and is permitted for foreign investment. It is expected to be cash-flow positive in FY 2019.

Creative Technology took a breather from recent gains to end lower at $7.08, down $1.22, or 15 per cent on news that Apple Inc is also looking at competing at the high-end audio space, following the surprise hit of its AirPods earphones.

Creative founder Sim Wong Hoo believes he has developed the holy grail of headphone audio in Super X-Fi product, which promises to deliver a "three-dimensional" listening experience mimicking how people hear in real life.

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