RTTNews - The Singapore stock market saw its four-day winning streak grind to a halt on Wednesday, after it had collected more than 170 points or 6.9 percent en route to a fresh 10-month closing high. The Straits Times Index is holding above the 2,600-point plateau, although investors are bracing for the market to slide through that support at the opening of trade on Thursday.
The global forecast for the Asian markets is mildly pessimistic as the downside correction is expected to continue following recent sharp gains. Resource stocks are expected to weigh heavily on investors - particularly the oil service, steel, natural gas and gold stocks. Disappointing earnings from Vale could add to the pressure on commodities. The European markets finished solidly higher, while the U.S. markets ended modestly lower - and the Asian markets are also expected to trend to the downside.
The STI finished modestly lower on Wednesday, as investors locked in gains from the recent rally. Financials and properties led the decline, while airlines also were down under selling pressure.
For the day, the index was off 19.98 points or 0.76 percent to close at 2,604.06 after trading between 2,567.66 and 2,642.79. Volume was 2.96 billion shares worth 2.39 billion Singapore dollars. There were 184 gainers and 420 decliners, with 737 stocks finishing unchanged.
Among the decliners, DBS, United Overseas Bank, Oversea-Chinese Banking Corp, CapitaLand, Keppel Land, City Developments and Singapore Airlines all finished lower.
The lead from Wall Street remains firmly negative as stocks bounced around in negative territory through Wednesday's session in reaction to the day's slew of earnings and economic reports following an early move to the downside. The major averages all finished lower by modest margins, experiencing another lackluster session.
On the economic front, the Commerce Department said that orders for transportation equipment declined sharply in June, contributing to a substantial decline in orders for manufactured durable goods. Durable goods orders fell 2.5 percent in June following a downwardly revised 1.3 percent increase in May. Economists had expected orders to fall 0.6 percent compared to the 1.8 percent increase originally reported for the previous month. Excluding a 12.8 percent decrease in orders for transportation equipment, orders for durable goods actually rose 1.1 percent in June compared to a 0.8 percent increase in May. The increase surprised economists, who had expected ex-transportation orders to come in unchanged.
Equities saw some further downside after the Treasury Department said its $39.0 billion sale of five-year notes drew a high yield of 2.625 percent. Demand was much weaker than expected, with the bid-to-cover ratio coming in at 1.92 compared to the 2.58 posted in the previous auction. The bid-to-cover ratio is a measure of demand that indicates the amount of bids for each dollar worth of securities being sold.
Meanwhile, the markets saw little reaction to the Federal Reserve's Beige Book report. While the report indicated that economic activity continued to be weak going into the summer, it noted that most of the twelve Fed districts indicated that the pace of decline has moderated or that activity has begun to stabilize.
In earnings news, traders looked to quarterly results from Time Warner (TWX), Qwest (Q) and ConocoPhillips (COP), which reported earnings that largely beat Wall Street estimates. However, revenues fell short of expectations, a typical trend that has emerged amid the current earnings season.
The major averages staged a recovery attempt in the final hour of trading, although they remained stuck in negative territory. The Dow fell by 26 points or 0.3 percent to 9,070.72, the NASDAQ slipped by 7.75 points or 0.4 percent to 1,967.76 and the S&P 500 declined by 4.47 points or 0.5 percent to 975.15.
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