Market Focus Daily: Thursday, June 26, 2025
Synopsis: Market Focus Daily is a closing bell roundup by The Business Times that looks at the day's market movements and news from Singapore and the region.
Written and hosted by: Emily Liu (emilyliu@sph.com.sg)
Produced and edited by: Chai Pei Chieh & Claressa Monteiro
Produced by: BT Podcasts, The Business Times, SPH Media
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Business Times
8 minutes ago
- Business Times
Trump may look like he's winning the trade war, but hurdles remain
[WASHINGTON] At a glance, US President Donald Trump appears to be winning the trade war he unleashed after returning to the White House in January, bending major trading partners to his will, imposing double-digit tariff rates on nearly all imports, narrowing the trade deficit, and raking in tens of billions of US dollars a month in much-needed cash for federal government coffers. Significant hurdles remain, however, including whether US trading partners will make good on investment and goods-purchase commitments, how much tariffs will drive up inflation or stymie demand and growth, and whether the courts allow many of his ad-hoc levies to stand. On inauguration day, the effective US tariff rate was about 2.5 per cent. It has since jumped to somewhere between 17 per cent and 19 per cent, according to a range of estimates. The Atlantic Council estimates it will edge closer to 20 per cent, the highest in a century, with higher duties taking effect on Thursday (Aug 7). Trading partners have largely refrained from retaliatory tariffs, sparing the global economy from a more painful tit-for-tat trade war. Data on Tuesday showed a 16 per cent narrowing of the US trade deficit in June, while the US trade gap with China shrank to its smallest in more than 21 years. American consumers have shown themselves to be more resilient than expected, but some recent data indicate the tariffs are already affecting jobs, growth and inflation. 'The question is, what does winning mean?' said Josh Lipsky, who heads economic studies at the Atlantic Council. 'He's raising tariffs on the rest of the world and avoiding a retaliatory trade war far easier than even he anticipated, but the bigger question is what effect does that have on the US economy.' BT in your inbox Start and end each day with the latest news stories and analyses delivered straight to your inbox. Sign Up Sign Up Michael Strain, head of economic policy studies at the conservative American Enterprise Institute, said Trump's geopolitical victories could prove hollow. 'In a geopolitical sense, Trump's obviously getting tonnes of concessions from other countries, but in an economic sense, he's not winning the trade war,' he said. 'What we're seeing is that he is more willing to inflict economic harm on Americans than other countries are willing to inflict on their nations. And I think of that as losing.' Kelly Ann Shaw, a White House trade adviser during Trump's first term who is now a partner at Akin Gump Strauss Hauer & Feld, said a still-strong economy and near-record-high stock prices 'support a more aggressive tariff strategy.' But Trump's tariffs, tax cuts, deregulation and policies to boost energy production would take time to play out. 'I think history will judge these policies, but he is the first president in my lifetime to make major changes to the global trading system,' she added. Deals so far Trump has concluded eight framework agreements with the European Union, Japan, Britain, South Korea, Vietnam, Indonesia, Pakistan and the Philippines that impose tariffs on their goods ranging from 10 per cent to 20 per cent. That's well short of the '90 deals in 90 days' administration officials had touted in April, but they account for some 40 per cent of US trade flows. Adding in China, currently saddled with a 30 per cent levy on its goods but likely to win another reprieve from even higher tariffs before an August 12 deadline, would raise that to nearly 54 per cent. Deals aside, many of Trump's tariff actions have been mercurial. On Wednesday he ratcheted up pressure on India, doubling new tariffs on goods from there to 50 per cent from 25 per cent because of its imports of oil from Russia. The same rate is in store for goods from Brazil, after Trump complained about its prosecution of former leader Jair Bolsonaro, a Trump ally. And Switzerland, which Trump had previously praised, is facing 39 per cent tariffs after a conversation between its leader and Trump derailed a deal. Ryan Majerus, a trade lawyer who worked in both the first Trump administration and the Biden government, said what's been announced so far fails to address 'longstanding, politically entrenched trade issues' that have bothered US policymakers for decades, and getting there would likely take 'months, if not years.' He also noted they lack specific enforcement mechanisms for the big investments announced, including US$550 billion for Japan and US$600 billion for the EU. Promises and risks Critics lit into European Commission President Ursula von der Leyen after she agreed to a 15 per cent tariff during a surprise meeting with Trump during his trip to Scotland last month, while gaining little in return. The deal frustrated winemakers and farmers, who had sought a zero-for-zero tariff. Francois-Xavier Huard, head of France's FNIL national dairy sector federation, said 15 per cent was better than the threatened 30 per cent, but would still cost dairy farmers millions of euros. European experts say von der Leyen's move did avert higher tariffs, calmed tensions with Trump, averting potentially higher duties on semiconductors, pharmaceuticals and cars, while making largely symbolic pledges to buy US$750 billion of US strategic goods and invest over US$600 billion. Meeting those pledges will fall to individual EU members and companies, and cannot be mandated by Brussels, trade experts and analysts note. US officials insist Trump can re-impose higher tariffs if he believes the EU, Japan or others are not honouring their commitments. But it remains unclear how that would be policed. And history offers a caution. China, with its state-run economy, never met its modest purchase agreements under Trump's Phase one US-China trade deal. Holding it to account proved difficult for the subsequent Biden administration. 'All of it is untested. The EU, Japan and South Korea are going to have to figure out how to operationalise this,' Shaw said. 'It's not just government purchases. It's getting the private sector motivated to either make investments or back loans, or to purchase certain commodities.' And lastly, the main premise for the tariffs Trump has imposed unilaterally faces legal challenges. His legal team met with stiff questioning during appellate court oral arguments over his novel use of the 1977 International Emergency Economic Powers Act, historically used for sanctioning enemies or freezing their assets, to justify his tariffs. A ruling could come any time and regardless of the outcome seems destined to be settled ultimately by the Supreme Court. REUTERS
Business Times
38 minutes ago
- Business Times
Singapore shares rise, mirroring regional gains despite tariff kick-off; STI up 0.7%
[SINGAPORE] Local stocks closed higher on Thursday (Aug 7), extending their winning streak to a fourth consecutive session, in line with broader gains across Asian markets. This came even as higher tariff rates imposed by US President Donald Trump on dozens of trading partners took effect. The Straits Times Index (STI) ended 0.7 per cent or 30.45 points higher at 4,258.15. Across the broader market, gainers outnumbered losers 320 to 201 after 2 billion securities worth S$2.1 billion changed hands. Yangzijiang Shipbuilding was the top gainer on the index for a second straight day, climbing 8 per cent or S$0.21 to close at S$2.84. The rally came after the Chinese shipbuilder on Wednesday posted a record-high net profit of 4.2 billion yuan (S$752.6 million) for the first half of 2025 , marking a 36.7 per cent jump from 3.1 billion yuan a year earlier. The counter surged more than 11 per cent in early trade , hitting S$2.92 by 9.35 am, up from Wednesday's close of S$2.63. This marked its highest level since February, when it reached S$3.30. Thursday's biggest decliner on the STI was UOB , falling 1.8 per cent or S$0.64 to S$35.81 , after reporting a 6 per cent year-on-year drop in second-quarter net profit to S$1.34 billion . BT in your inbox Start and end each day with the latest news stories and analyses delivered straight to your inbox. Sign Up Sign Up The weaker result was attributed to a decline in net interest income amid narrowing margins, and missed the S$1.48 billion consensus forecast from a Bloomberg poll of six analysts. The other two local banking stocks closed higher on Thursday. OCBC edged up 0.3 per cent or S$0.05 to S$17.09; DBS , meanwhile, soared after it announced a rise in Q2 earnings to S$2.82 billion ; the counter briefly touched the S$50 mark before closing at S$49.75, up 1.8 per cent or S$0.90 on the day. Elsewhere in the region, key indices closed higher. Malaysia's Bursa Malaysia KLCI rose 0.4 per cent; Japan's Nikkei 225 and Hong Kong's Hang Seng Index both grew 0.7 per cent. South Korea's Kospi gained 0.9 per cent, and Taiwan's Stock Exchange Weighted Index surged 2.4 per cent. The gains came as US President Donald Trump announced 100 per cent tariffs on semiconductor chips, with exemptions for investments made within the US. This explains the seemingly counterintuitive Apple-led rally in US tech stocks, said Vishnu Varathan, head of macro research for Asia (excluding Japan) at Mizuho Securities. 'The cognitive dissonance involved in the Apple-led tech rally firing up Nasdaq bulls on one hand and Trump's 100 per cent tariffs on semiconductors is remarkable,' he added. More broadly, Varathan sees trade partners possibly using their American investments as bargaining chips to mitigate the impact of US tariffs. A prominent example is China, whose control over rare earth materials and dominant industrial position '(afford) concessions and partial immunity' from tariff pressures.
Business Times
an hour ago
- Business Times
DBS looks to volume growth to mitigate falling interest rates; stock soars to record high, hits S$50 mark
[SINGAPORE] Shares of DBS soared to a record high on Thursday (Aug 7) – briefly hitting a milestone S$50 mark – as South-east Asia's biggest lender beat expectations for its second-quarter results amid challenging times ahead for the banks. The counter eased to close at S$49.75, up 1.8 per cent for the day, after some 6.5 million shares changed hands. Shares of DBS have climbed 13.8 per cent in the year to date. In the quarters ahead, the bank expects falling interest rates to put a dent in its net interest margin (NIM). But chief executive Tan Su Shan believes deposits volume growth will continue to support net interest income for 2025. Speaking at the lender's second-quarter results briefing on Thursday, Tan flagged changes in interest rates and foreign exchange (forex) as the biggest risks to performance; she said, however, that this could be mitigated by volume growth. 'Don't focus on NIMs, because the NIM will go down with the markets, but the net interest income can go up with volumes, and that's how you mitigate that, and also how you hedge your net interest income risk nimbly.' Tan expects the bank's ability to manage balance sheets, grow deposits and capture market share will help tide it through uncertainty and hit its 2025 target of having group net interest income slightly above 2024 levels. BT in your inbox Start and end each day with the latest news stories and analyses delivered straight to your inbox. Sign Up Sign Up Meanwhile, DBS continues to boost structural growth in wealth management, global transaction services, digitalisation, financial institutions. Q2 earnings beat expectations DBS on Thursday posted a year-on-year rise of 1 per cent in net profit to S$2.82 billion for Q2, beating the S$2.79 billion consensus forecast in a Bloomberg survey of six analysts. Commercial book net interest income fell 4 per cent to S$3.63 billion; NIM fell 28 basis points (bps) year on year to 2.55 per cent due to US Federal Reserve rate cuts, as well as lower Singapore Overnight Rate Average (Sora) and Hong Kong Interbank Offered Rate (Hibor). This was mitigated by balance sheet hedging and partly offset by strong deposit growth. Tan said that because forex rates drive interest rate volatility, there is a need for the bank to be nimble with interest rate swaps and forex hedging. Deposits in Q2 rose 7 per cent on year in constant-currency terms to S$574 billion, from increases in both fixed deposits and current and savings accounts. Having seen sustained momentum in July, Tan expects deposits growth will continue for the rest of the year. The growth in deposits exceeded loan growth, and the surplus was deployed into liquid assets, which was accretive to net interest income and return on equity, though it modestly reduced NIM. Return on equity for Q2 stood at 16.7 per cent, down from 18.2 per cent a year earlier. Meanwhile, Q2 loans rose 4 per cent in constant-currency terms to S$433 billion, led by non-trade corporate loans from broad-based growth across industries. Tan said the lender has seen structural growth in its loans; it has been increasing market share by deepening its industry expertise, and winning lead manager roles. She still sees opportunities for strong growth in non-trade corporate loans in segments including tech, as well as in logistics and transportation. Commercial book net fee and commission income was up 11 per cent at S$1.17 billion, largely due to higher wealth management fees, while investment banking fees were higher from increased debt and equity capital market activity. Tan said the lender's fee income was 'quite pleasing', given that growth was across the board in wealth fees, loan fees and treasury sales fees. Commercial book other non-interest income increased 9 per cent to S$522 million, driven by strong treasury customer sales to wealth management and corporate customers. Markets trading income, meanwhile, more than doubled to S$418 million from higher contributions across a range of activities, benefiting from lower funding costs and a more conducive trading environment. The bank's non-performing loans ratio fell to 1 per cent, from 1.1 per cent the same period a year earlier, as new non-performing asset formation stayed low and was more than offset by higher repayments and write-offs. DBS declared an ordinary dividend of S$0.60 per share and a capital return dividend of S$0.15 per share for the period. This brings the quarter's total dividend payout to S$0.75 per share, compared with the S$0.54 in the year-ago period. DBS kept its 2025 guidance. It expects commercial book non-interest income growth to be mid- to high-single digits, supported by a double-digit growth in wealth management; cost-income ratio to be in the low-40 per cent range; and specific provisions will normalise to 17 to 20 bps in the second half. Overall, it is guiding for net profit to be below 2024 levels mainly due to global minimum tax of 15 per cent.
