RTTNews - The Singapore stock market on Tuesday wrote a finish to the modest two-day winning streak in which it had collected more than 55 points or 3 percent along the way. The Straits Times Index slid below support at 2,240 points, although analysts predict that the market will be able to recover at the opening of trade on Wednesday.
The global forecast for the Asian markets is cautiously optimistic, although the positive sentiment could be damaged by the test-firing of another missile on Wednesday morning by North Korea. The markets get a boost from better than expected economic data out of the United States, and retailers also are forecast to trade higher. The European markets finished mostly higher and the U.S. markets ended sharply higher - and the Asian bourses are also tipped to trade in the green.
The STI finished sharply lower on Tuesday, thanks to selling pressure among the financials and properties. For the day, the index fell 28.67 points or 1.3 percent to close at 2,238.79 after trading between 2,234.45 and 2,276.96. Volume was 2.75 billion shares, with losers outnumbering gainers 311 to 194.
Among the actives, Neptune Orient Lines fell 2.8 percent, while Keppel Corp added 0.3 percent, DBS Group fell 1.7 percent, Genting International was down 2.3 percent and COSCO Corp lost 3.25 percent.
The lead from Wall Street is broadly positive as stocks staged a substantial rally over the course of the trading day on Tuesday after seeing some initial weakness, snapping a four-day losing streak. The major averages finished near their best levels of the day, bolstered by some positive news on the health of the U.S. consumer.
The Conference Board's reading on consumer confidence for May improved by far more than expected, reaching its highest level since September. The data generated some optimism about the outlook for consumer spending, which accounts for nearly two-thirds of economic activity. The consumer confidence figure helped to bolster some of the day's risk appetite, as reflected by the surge in equities following the release of the report.
Earlier in the day, disappointing housing price data contributed to the initial weakness. Traders largely shrugged off the data, however, citing the lagging nature of the numbers and choosing to focus on the encouraging consumer confidence data.
Retail stocks enjoyed a considerable run-up on the day, benefiting from the better than expected consumer confidence data. The S&P Retail Index closed up 4 percent, although it remains well off the seven-month highs that it set earlier this month.
The major averages moved roughly sideways in the second half of the day, holding onto strong gains. The Dow closed up 196.17 points or 2.4 percent at 8,473.49, the Nasdaq rose 58.42 points or 3.5 percent to 1,750.43 and the S&P 500 closed up 23.33 points or 2.6 percent at 910.33.
In economic news, Singapore's Economic Development Board said on Tuesday that the manufacturing output shrank 0.5 percent year-on-year in April, far better than a revised 32.8 percent drop in March. Economists were expecting a fall of 21 percent. Month-on-month, the manufacturing output grew a seasonally adjusted 24.7 percent in April, faring better than economists' expectations of a 6.3 percent growth and reversing a revised 15.1 percent drop in March.
Further, the Ministry of Trade and Industry, in its latest report lowered the growth forecast for the economy for the current year, as there were still no decisive indicators of economic recovery. The ministry said the economy could now shrink between 6 percent and 9 percent in the current year, following its earlier estimate of a 2 percent to 5 percent contraction in January.
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