SINGAPORE stocks closed lower on Tuesday (Jan 21), following US President Donald Trump’s second inauguration, even though most markets in the region ended in the black.
The benchmark Straits Times Index (STI) slipped 0.3 per cent or 12.6 points to finish at 3,795.37.
On the STI, Frasers Centrepoint Trust was the biggest gainer, rising 1.4 per cent or S$0.03 to S$2.15. Hongkong Land came in at the bottom of the index, falling 2.1 per cent or US$0.09 to US$4.20.
The trio of local banks all ended in the red. UOB closed 0.9 per cent or S$0.33 lower at S$36.82, OCBC was down 0.6 per cent or S$0.11 at S$17.05, and DBS lost 0.2 per cent or S$0.09 to S$43.53.
Across the broader market, gainers outnumbered losers 256 to 212, after one billion securities worth S$990.5 million changed hands.
Most key indices in the region ended higher. Hong Kong’s Hang Seng Index rose 0.9 per cent, Japan’s Nikkei 225 gained 0.3 per cent, and the Bursa Malaysia Kuala Lumpur Composite Index was up 0.5 per cent. However, South Korea’s Kospi Composite Index slipped 0.1 per cent.
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IG market strategist Yeap Jun Rong noted that there has undoubtedly been a “sense of relief” across global markets because trade measures have not been an immediate focus on Trump’s “Day One”.
“We may still expect tariffs to be implemented with some ‘fire and fury’, but the current dynamics may favour a more reactionary approach over a predictive one,” he said.
Trump did not mention any specific tariff plans on China in his inaugural address after he was sworn in as US president, but said he was considering a 25 per cent tariff on goods from Mexico and Canada.
He also reiterated that he would set up a new agency to collect tariffs and duties from foreign sources.
UOB senior economist Alvin Liew said in a note that even though markets were comforted Trump did not formally impose any tariff measures, the president has made it clear that tariffs are still a top item on his agenda.
“Some speculated the absence of concrete tariff announcements could indicate that trade measures could still be at the formulation stages,” he added.
Liew also said UOB is maintaining its base-case scenario, with a 55 per cent likelihood of a more measured approach to tariff imposition.
This means an additional 25 per cent tariff on China, instead of the proposed 60 per cent.
It also includes 10 per cent tariffs on economies that have seen an increase in trade surpluses with the US due to trade diversion from China, and no blanket tariff on all US imports.
The implementation is expected to occur in stages, starting as early as the second quarter of 2025 and to be fully completed by the first half of 2026.
While Trump’s presidency plays a major role in affecting markets, other factors are also at play.
“Besides Trump 2.0, the Fed has hit the brakes as a result of stronger-than-expected economic activity and slower progress towards disinflation, and that is also a major consideration,” noted Benoit Anne, a managing director at MFS Investment Management, in a commentary.
He added that the world is entering a new macroeconomic phase that he has coined “Trumpilocks”.
Under this regime, maintaining strong confidence in long-duration investments becomes more challenging, primarily due to a less supportive inflation outlook.
Yeap observed that with Asia’s economic calendar being relatively quiet, attention is turning to Trump’s policy priorities and the potential for tariff relief which, along with a weaker US dollar, is expected to create favourable conditions for further market growth.
“We keep our eyes on the Hang Seng Index, and with China being the primary target of Trump’s tariff agenda, a delay in tariff implementation may offer room for relief,” he added.
