Singapore stocks inch up on trade hopes

[SINGAPORE] Singapore’s stock market ended slightly higher on June 3, buoyed by investor optimism over potential trade talks between the United States and China. The Straits Times Index (STI) edged up 0.1% to close at 3,894.38, with market breadth positive as gainers outnumbered losers. Trading volume was robust, with 1.1 billion securities worth S$1.3 billion changing hands.

Across the region, performance was mixed. Hong Kong’s Hang Seng Index surged 1.5%, reflecting hopes for a breakthrough in US-China trade tensions, while Japan’s Nikkei 225 and Malaysia’s main index slipped. The positive sentiment in Singapore was underpinned by reports that US President Donald Trump and Chinese President Xi Jinping may hold direct talks this week, raising expectations for progress on tariffs and trade relations.

Within the STI, Yangzijiang Shipbuilding led gainers with a 4.3% jump, while DFI Retail Group fell 2.2% after announcing a significant divestment in Robinsons Retail. Local banks—DBS, UOB, and OCBC—all finished in the red, reflecting ongoing uncertainty in the financial sector.

Implications

For Businesses:

The anticipation of renewed US-China trade negotiations and the temporary extension of some tariffs injects both hope and caution into the business environment. Exporters and manufacturers, particularly those with complex supply chains spanning Asia and the US, are watching closely. Any progress toward tariff relief could lower costs and stabilize planning, but the lack of a permanent resolution means businesses remain hesitant to make long-term investments or supply chain shifts.

For Consumers:

Consumers may see some relief from inflationary pressures if tariffs are rolled back or suspended, as imported goods could become less expensive. However, the uncertainty around the duration and scope of these tariff pauses means that prices for everyday goods—especially electronics, appliances, and vehicles—could remain volatile. Consumer sentiment has already been dampened by months of trade uncertainty, with surveys showing increased concern about job security and household finances.

For Public Policy:

The ongoing trade dispute highlights the challenge for policymakers in balancing national economic interests with global stability. The move toward bilateral, rather than multilateral, trade deals introduces unpredictability into the system, making it harder for governments to plan and for international organizations to mediate disputes. The short-term truce buys time, but without a comprehensive agreement, the risk of abrupt policy shifts remains high, potentially undermining global economic growth and cooperation.

What We Think

The modest uptick in Singapore’s market underscores how sensitive global equities remain to geopolitical developments, especially those involving the world’s two largest economies. While the prospect of direct talks between Trump and Xi has provided a temporary boost, the underlying reality is that trade policy remains highly unpredictable. As one analyst put it, “Market sentiment is struggling to find stability as trade policies remain unpredictable”.

For businesses and investors, the current environment demands agility and caution. The 90-day tariff pause is a welcome reprieve, but it is not a resolution. The complexity of the overlapping tariffs, and the ease with which they can be reimposed, means that supply chains and investment flows are likely to remain in flux. Consumers, meanwhile, may not see immediate price relief, as companies hedge against future disruptions.

Ultimately, the global trading system appears to be shifting toward a more fragmented, bilateral model, with less reliance on established multilateral frameworks. This raises the risk of sudden policy reversals and increased volatility, both in markets and in the real economy. As negotiations continue, stakeholders should prepare for a landscape where uncertainty is the new normal, and resilience is more valuable than ever.