RTTNews - The two-day winning streak came to a crashing halt for the Singapore stock market, which had gathered more than 60 points or 2.4 percent in the process. The Straits Times Index plummeted all the way down to the 2,540-point plateau, and now analysts say the market likely will give that up by the opening of trade on Tuesday.
The global forecast for the Asian markets is broadly pessimistic as markets around the world plunged on fears that an economic recovery is not quite as close as many had believed. Resource stocks are expected to see continued pressure - particularly the steel, oil and gold stocks - while the financials and properties also are forecast to see heavy selling pressure. The European and U.S. markets were sharply lower, and the Asian markets are tipped to follow that lead.
The STI finished sharply lower on Monday, with losses pretty much across the board - although the financials and properties were hit especially hard.
For the day, the index dropped 85.53 points or 3.22 percent to close at 2,545.98 after trading between 2,545.49 and 2,591.71. Among the top decliners, DBS was down 2.5 percent, while Singapore Telecommunications shed 3.1 percent and CapitaLand lost 3.8 percent.
The lead from Wall Street is brutally negative as stocks saw a sharp pullback on Monday, with last week's disappointing data on the health of the consumer sparking a broad-based sell-off in equities. The major averages all finished substantially lower, as some speculated that the markets rose in spite of weak fundamentals.
Also deflating traders' mood was news that Lowe's (LOW) second quarter earnings and revenues fell short of estimates. The home improvement retailer also provided disappointing guidance.
Nonetheless, some of the pessimism was moderated by the release of a report from the Federal Reserve Bank of New York showing that conditions for New York manufacturers improved for the first time in well over a year in the month of August. The New York Fed said its general business conditions index rose to 12.1 in August from a negative 0.6 in July, with a positive reading indicating an expansion in the manufacturing sector. Economists had been expecting the index to increase more modestly to 3.0.
Stocks rose by a modest margin after the National Association of Home Builders released its report on homebuilder confidence in the month of August, showing that its homebuilder confidence index rose to its highest level in over a year. The report showed that the NAHB/Wells Fargo Housing Market Index rose to 18 in August from 17 in July. With the increase, which came in line with economist estimates, the index rose to its highest level since June of 2008.
The major averages remained stuck in the red going into the close, finishing near their worst levels of the day. The Dow closed down by 186.06 points or 2 percent at 9,135.34, the NASDAQ fell by 54.68 points or 2.8 percent to 1,930.84 and the S&P 500 slipped by 24.36 points, or 2.4 percent to 979.73.
In economic news, the International Enterprise Singapore said on Monday that non-oil domestic exports increased 6.1 percent in July from the prior month compared to 5 percent drop in June. On a yearly basis, NODX dropped 8.5 percent in July, following June's 11 percent decrease. Economists had expected an annual fall of 11.3 percent for July.
Meanwhile, non-oil re-exports increased 6.1 percent in July, in contrast to the 1.8 percent decline in the previous month, due to a rise in both electronic and non-electronic NORX.
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