RTTNews - One day after halting the four-day slide that had cost it more than 130 points or 5 percent, the Singapore stock market turned right back to the downside on Wednesday. The Straits Times Index fell below the 2,575-point plateau, although investors are optimistic that the market will rebound solidly by the opening of trade on Thursday.
The global forecast for the Asian markets is firmly positive, thanks largely to encouraging commentary from the U.S. Federal Reserve after it decided to keep interest rates on hold. Housing and airline stocks are primed for a rebound in Thursday's trade, along with steel and telecom shares. The European and U.S. markets all finished with solid gains, and the Asian bourses also are expected to track higher on Thursday.
The STI finished sharply lower on Wednesday, as losses in the financial sector weighed heavily on investors. For the day, the index shed 25.99 points or 1.00 percent to close at 2,571.31 after trading between 2,564.00 and 2,594.71.
Among the decliners, DBS Group shed 2.32 percent and Singapore Telecommunications fell 1.55 percent, while Singapore Airlines, Keppel Corp and United Overseas Bank also finished under pressure.
The lead from Wall Street is broadly optimistic as stocks saw a strong outing on Wednesday, with trader expectations largely confirmed by the Federal Reserve. The major averages all closed in positive territory by substantial margins, posting their first positive session of the week after the previous two days were slowed by profit taking.
The Federal Open Market Committee, the policy-making arm of the Federal Reserve, announced Wednesday that it was maintaining the target range for its benchmark federal funds rate at zero to 0.25 percent. The Fed also repeated its belief that low rates will persist for what it calls an extended period. The central bank added that economic activity is leveling out.
The central bank also said it will gradually slow the pace of treasury purchases and expects that the full amount of $300 billion will be purchased by the end of October. Going into the meeting, the Fed was universally expected to leave rates unchanged, but there was some speculation that the central bank could announce the end of its program to buy treasury bonds, a move it had undertaken to further stimulate the economy.
Earlier, traders largely shrugged off a report from the Commerce Department showing that the U.S. trade deficit widened in the month of June compared to the previous month. The deficit for the month still came in narrower than economists had been anticipating. The report revealed that the trade deficit widened to $27.0 billion in June from $26.0 billion in May, with imports increasing at a faster pace than exports. Economists had been expecting a somewhat more significant increase in the size of the deficit to $28.7 billion.
The major averages saw a late session rally stall but still finished with notable gains. The Dow jumped by 120.16 points or 1.3 percent to 9,361.61, the NASDAQ climbed by 28.99 points or 1.5 percent to 1,998.72 and the S&P 500 rose by 11.46 points or 1.2 percent to 1,005.81.
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