Singapore’s STI jumps 1.8% on US-China tariff truce; bank shares soar
Under a 90-day reprieve, the US is to slash duties on China products to 30% from 145%
[SINGAPORE] Most Asian markets continued their rally on Tuesday (May 13), as investors cheered the announcement that the US and China would temporarily lower tariffs on each other’s products in a 90-day cool-off period.
Singapore’s Straits Times Index (STI) jumped about 1.8 per cent or 68.82 points in morning trade to reach 3,944.78, as trading resumed after Monday’s Vesak Day break.
By around 4 pm, the index had cooled to 3,891.98 points, or a gain of 0.4 per cent. A total of 1.1 billion shares worth a collective S$1.6 billion had changed hands, with gainers outnumbering losers 369 to 202.
Singapore banks opened strongly, with UOB surging 5.6 per cent or S$1.95 to S$36.78. DBS rose 1.8 per cent or S$0.77 to S$44.48, and OCBC climbed 1.8 per cent or S$0.29 to S$16.52.
The largest gainers were Yangzijiang Shipbuilding with a 6.6 per cent jump, as well as Mapletree Logistics Trust, which rose 5.6 per cent. Sats also opened strong, climbing 4.5 per cent. Yangzijiang Shipbuilding’s shares had been hammered in recent weeks following the US’ decision to impose port fees on all ships built in China.
In Hong Kong, the Hang Seng Index soared on Monday, but gave up its gains on Tuesday to dip 1.9 per cent at the close, as did the Shenzhen Composite index with a 0.1 per cent loss. Shanghai’s index, however, bucked the trend by edging up 0.2 per cent.
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Following the announcement on Monday, the Hang Seng Index climbed 3 per cent to 23,549.46 at the close. The CSI 300, comprising stocks traded on the Shanghai and Shenzhen exchanges, climbed 1.2 per cent.
Japan’s Nikkei 225 index climbed about 2.2 per cent shortly after the opening bell, after having closed 0.4 per cent higher on Monday. By the trading day’s end, the index was up 1.4 per cent at 38,183.26 points.
The US and China said in a joint announcement on Monday they would pause the punitive reciprocal tariffs on each other’s products, with both sides saying they would cut existing tariffs by 115 percentage points. This takes levies of China imports into the US to 30 per cent from 145 per cent; China is to cut tariffs on US goods to 10 per cent from 125 per cent.
“As already evidenced by ongoing market reaction, this pause and cool-off period will help to extend the rally initiated in mid-April, mostly supported by the sentiment that the peak of trade uncertainties is behind us,” said Jean-Louis Nakamura, head of conviction equities at Vontobel.
US markets rallied following the news on Monday, with the S&P 500 index closing 3.3 per cent higher and the Nasdaq Composite index surging 4.4 per cent by the close. The Dow Jones Industrial Average was up 2.8 per cent.
Gold fell about 2.7 per cent to US$3,239 an ounce, as confidence returned to riskier assets such as equities.
Stock gains in the US have largely recouped the losses sustained in March and early April, after Trump’s “Liberation Day” tariff announcements sparked worldwide fears of recession.
Some analysts believe investor optimism may still be premature. Nakamura said: “The reality is that while markets have retraced the totality of their correction experienced in the first 10 days of April, implemented tariffs are still significantly higher than before.”
“We have no clear view of the extent of damage done to the global economy in the meantime, particularly in the US and China,” he added, noting that economic data within the next two months would be instructive.
In South Korea, the Kospi inched upwards about 0.04 per cent to close 1.1 point higher, at 2,608.42 points.
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