The Singapore stock market has finished lower now in back-to-back sessions and in three of the last four trading days since ending the five-day winning streak that saw it collect more than 220 points or 15 percent. The Straits Times Index crashed through support at 1,675 points, and now investors are bracing for even further declines at the opening of trade on Tuesday.
The global forecast for the Asian markets is broadly negative, with continued pressure likely among the automobile stocks and the financial issues. The European and U.S. markets finished sharply lower on Monday and the Asian bourses are tipped to follow that lead - although the losses may not be quite as heavy, since the Asian markets already suffered sizeable losses in Monday's trade.
The STI finished sharply lower on Monday, as investors continued to clock in profits from last week's winning streak. The financial shares finished under heavy selling pressure throughout the session, while the properties also ended in the red.
For the day, the index plummeted 72.52 points or 4.15 percent to close at 1,673.14 after trading between 1,658.04 and 1,737.24. Volume was 1.06 billion shares worth 882 million Singapore dollars. There were 367 decliners and 120 gainers, with 782 stocks finishing unchanged.
The financials led the market to the downside as DBS Group Holdings was down 4.1 percent, United Overseas Bank lost 5.7 percent and Oversea-Chinese Banking Corp was 3.4 percent lower, while City Developments, CapitaLand, Keppel Land, Singapore Airlines, Singapore Telecommunications and SembCorp Marine also finished lower.
Wall Street offers another sharply pessimistic lead as stocks saw continued weakness throughout the trading day on Monday after moving sharply lower in early trading. While the major averages did not see much follow-through on their early downward move, they remained stuck firmly in negative territory. The weakness in the markets came as investors responded to disappointing news regarding the auto industry as well as renewed concerns about the outlook for the financial sector. Some traders also looked to cash in on the gains seen in the three previous weeks.
Much of the selling pressure came as President Obama and his auto task force indicated that General Motors (GM) and Chrysler have not gone far enough in their restructuring plans and need to step up their efforts to reorganize in order to receive additional government aid. While the administration will continue to provide operating funds for the next few weeks, it has given both GM and Chrysler a final deadline, threatening bankruptcy if the beleaguered auto giants do not significantly increase their efforts to restructure their business.
Additionally, at the request of the White House, Rick Wagoner has stepped down as chairman and CEO of General Motors, with Fritz Henderson, GM president and chief operating officer, set to replace Wagoner as CEO.
Financial stocks also experienced considerable weakness after Treasury Secretary Geithner suggested that more banks might need bailout funds. Appearing on the Sunday talk shows, Geithner explained that the ongoing stress tests for the financial industry have shown many other banks need funds from the TARP, although he said there is only about $135 billion left in the bailout pool.
Meanwhile, optimism surrounding this week's G20 summit has waned, as investors fear that earlier hopes that the countries will agree to a coordinated fiscal boost appear to have been crushed by skepticism in many European governments.
The major averages regained some ground going into the close of trading, but they remained firmly negative. The Dow closed down 254.16 points or 3.3 percent at 7,522.02, the Nasdaq closed down 43.40 points or 2.8 percent at 1,501.80 and the S&P 500 closed down 28.41 points or 3.5 percent at 787.53.
For comments and feedback: contact firstname.lastname@example.org