Singapore stocks give up most gains from US-China tariff truce as Asia relief rally cools

Stock markets in Asia on May 13 lost or trimmed earlier gains from a relief rally on hopes a 90-day tariff truce will mark the end of an all-out trade war between the US and China.

- Sue-Ann Tan

Analysts said the immediate euphoria after the May 12 announcement has given way to growing caution over the tough road ahead to reach a permanent and comprehensive trade deal.

In Singapore, the Straits Times Index (STI) jumped 1.89 per cent to 3,949.29 when the market opened. But it lost almost all of its gains to close up just 0.1 per cent at 3,881.05.

Other Asian markets also pared earlier gains, with Japan's Nikkei index closing 1.4 per cent higher, Australia's ASX200 adding 0.4 per cent, and South Korea's Kospi index ending almost unchanged.

Hong Kong's Hang Seng Index reversed its 1.3 per cent jump the previous day to drop 1.9 per cent, while the Shanghai Composite Index edged up just 0.2 per cent.

On Wall Street on May 12, the blue-chip Dow Jones Industrial Average had rallied 1,160 points, or 2.8 per cent, while the broader S&P 500 surged 3.3 per cent, and the tech-heavy Nasdaq 100 Index soared 4.35 per cent back into a bull market.

The US dollar, meanwhile, jumped more than 1 per cent on May 12 for its best one-day move since Nov 6, in the immediate aftermath of Mr Donald Trump's victory in the US presidential election.

Against the Singapore currency, the US dollar shot up 0.8 per cent to 1.308 on May 12 from around 1.297 on May 9. It was trading at 1.3037 per Singapore dollar as at noon on May 13.

Under the surprise deal, which will last for 90 days, US exports to China will see tariffs reduced to 10 per cent from 125 per cent. Meanwhile, tariffs on Chinese exports to the US will be lowered to 30 per cent from 145 per cent.