Citing ‘substantial progress’ in its negotiations with China in Washington, U.S. President Donald Trump extends the March 1 tariff deadline, postponing for increase in tariffs to 25 percent from 10 percent on US$200 billion worth of Chinese imports. Trump has expressed hopes of further progress and a meeting with Chinese President Xi Jinping at Mar-a-Largo.
On the other hand, the second summit between Trump and North Korea leader Kim Jong Un ended abruptly. No agreement was reached at their two-day summit in Hanoi.
In spite of a solid US economic growth, stronger wage gain and with inflation near the Fed’s two percent target, US Federal Reserve reaffirms its dovish stance and will take a ‘patient’ approach before adjusting interest rate as Jerome Powell warned of emerging headwinds including slowing growth in China and Europe, Brexit, trade negotiations and the effects of the five-week U.S. government shutdown.
Optimism on the trade front and dovish signals from the Fed have bolstered US stocks in the past two weeks. The DJIA rose 1.9 percent to close at 25,916, Nasdaq Composite added 1.4 percent to 7,532.53 and S&P 500 edged up 1.4 percent to close at 2,784.49.
Elsewhere in Asia, markets also reacted favorably to the trade hopes. Shanghai composite surged 5.6 percent after Trump extends deadline for tariffs hike, registering the best daily gain since September 2015. Over the fortnight, the Shanghai Composite Index climbed 9.6 percent higher at 2,940.95 while the Hang Seng Index also closed 2.6 percent higher to 28,633.18. During the same period, Japan’s Nikkei 225 rose 2.3 percent to 21,385.16.
On the local front, Singapore’s industrial production shrank 3.1 percent in January 2019, the first contraction since December 2017. In early of February, Singapore also reported its slowest economic growth in two years, as the economy grew only 3.2 percent in 2018, a notch below initial estimate of 3.3 percent and a moderation from 3.9 percent in 2017. Global uncertainties will continue to weigh on business sentiment while the Singapore economy growth is expected to slow for the year ahead. For the fortnight, the Straits Times Index closed lower by 0.6 percent at 3,220.40.