The clock is ticking on G20, one of the most important political events going into the end of June and potentially setting the path for future trade negotiations between Washington and Beijing.

President Trump warned on Wednesday that he has a ‘Plan B’ – to impose 10% instead of 25% tariffs on the remaining Chinese goods that shipped to the United States and ‘do less and less business with them’ – if there is no progress on a trade deal at the G20. Again, China’s state media responded with silence.

Structural reform of China’s state-lead economic model and a further opening up of its market are at the centre of the trade negotiations. Can Beijing offer a deal to satisfy their US counterpart, while keeping its economy on track for rapid growth for the benefit of 1.3 billion nationals is a big question.

A much weaker-than-expected US durable goods report last night painted a doomed picture of the US manufacturing sector, underscoring a soft consumer sentiment survey on Monday. The durable goods order figure, which reflects manufacturing activity in the USA and is a barometer of consumer’s confidence in the economy, has dropped 1.3% in May, missing consensus forecast of a 0.1% drop.

US equity indices closed mildly lower, but technology benchmark Nasdaq was lifted by the semiconductor sector. 7 out of the 11 S&P 500 sectors closed lower, dragged by utilities (-2.15%), real estate (-1.96%), consumer staples (-1.38%) and healthcare (-1.25%). Outperforming sectors include energy (+1.54%), information technology (+1.09%) and consumer discretionary (+0.41%).

In Singapore, the STI managed to hold above 3,300 level and opened 0.4% higher on Thursday. Sectorial rotation led to a mixed picture of shares’ performance these days. As a result of lower expectations for a deep interest rate cut in July, the real estate sector is seeing some profit-taking. Defensive sectors including telcos and consumer staples demonstrated resilience against geopolitical headwinds.

The crude oil market may find more support from geopolitical tensions surrounding the gulf area and a big drop in US commercial inventory. Last night, the DoE report shows the oil stockpile in the US has fallen by 12.78 million barrels in the past week, far beating expectations of a 2.8 million barrels drop.

WTI oil has found strong support at around US$ 51.0 in early June, and immediate resistance level can be found at US$ 60.0 and then US$ 65.0.

US Durable Goods Orders

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