RTTNews - The Singapore stock market has posted gains now in two straight sessions, adding more than 120 points or 5.3 percent along the way. The Straits Times Index is drawing close to the 2,400-point plateau, and now analysts suggest that the market could break through that level at the opening of trade on Thursday.
The global forecast for the Asian markets is broadly optimistic, thanks to solid earnings reports, encouraging remarks from the FOMC and some decent economic data out of the world's largest economy. A rebound among the commodities and crude oil prices adds to the positive sentiment. The European and U.S. markets finished sharply higher, and the Asian bourses are also predicted to show solid gains.
The STI finished sharply higher on Wednesday, spurred by positive earnings news from Goldman Sachs and Intel. Financials led the rally, while industrials and property stocks also ended with solid gains.
For the day, the index surged 78.87 points or 3.41 percent to close at 2,389.42 after trading between 2,319.40 and 2,389.42. Volume was 1.8 billion shares, with 427 gainers and 116 decliners.
Among the gainers, Neptune Orient Lines surged 7.9 percent, while Cosco jumped 7.0 percent, City Development added 4.3 percent, CapitaLand collected 4.4 percent, United Overseas Bank gained 6.0 percent, Oversea-Chinese Banking Corp was up 2.5 percent, DBS added 3.6 percent, Keppel Corp was up 2.9 percent, SembCorp Marine gained 3.2 percent, Golden Agri collected 8.5 percent, Olam International was up 2.3 percent and Wilmar International gained 1.9 percent.
Wall Street offers a sharply positive lead as stocks continued to move higher throughout much of Wednesday's trading session after a strong start, fueled by trader reaction to the day's earnings data. The major averages all posted substantial gains on the day, extending their gains for the third straight session.
Early strength came amid reaction to a slew of earnings reports, spearheaded by Intel (INTC), which beat analysts' second quarter earnings estimates. While Yum! Brands (YUM) also beat expectations, Abbott Labs (ABT) and Altera (ALTR) reported earnings that came in line with estimates.
Stocks were further bolstered in the afternoon following the Federal Reserve's announcement that it expects a less severe economic contraction in 2009 and a moderately stronger recovery in 2010. The minutes of the June meeting of the Federal Open Market Committee showed that the GDP estimates were revised to show a smaller than expected decrease in 2009 and a bigger than expected increase in 2010. At the same time, the Fed said it expects the unemployment rate to come in higher than previously estimated based on the incoming employment data.
The day's influx of economic figures was kicked off this morning by a Labor Department report showing that consumer prices saw a 0.7 percent increase in June compared to the previous month. Economists had projected an advance of about 0.6 percent. Compared to the same period last year, consumer prices were down 1.4 percent, the largest year-over-year decline since 1950. Core prices, which exclude the volatile food and energy sectors, advanced 0.2 percent compared to the previous month. Economists had expected an increase of 0.1 percent.
A separate report from the Federal Reserve indicated a continued decrease in industrial production in the month of June, although the rate of decline slowed by more than economists had been anticipating. With the slowdown, industrial production fell at its slowest pace since the 1.3 percent jump that was seen in October of 2008.
The major averages saw further upside in late day trading, finishing near their best levels of the day. The Dow closed up by 256.72 points or 3.1 percent at 8,616.21, the NASDAQ climbed 63.17 points or 3.5 percent to 1,862.90, and the S&P 500 rose 26.84 points or 3 percent to 932.68.
In economic news, Singapore's Department of Statistics said on Wednesday that retail sales at current prices climbed a seasonally adjusted 0.8 percent month-on-month in May, after falling 3 percent in the preceding month. Economists expected sales to grow 0.4 percent. Excluding motor vehicles, retail sales dropped 0.3 percent in May, reversing a 1.3 percent growth in the preceding month.
Year-on-year, retail sales slipped 10.3 percent in May - slower than an 11.4 percent drop in the preceding month. Economists expected a fall of 10.6 percent. Excluding motor vehicles, sales were down 4.6 percent compared to a 3.5 percent fall in April. Meanwhile, the catering trade index at current prices declined 3.5 percent month-on-month, and was down 5.7 percent on a yearly basis in May.
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