RTTNews - The Singapore stock market has closed higher now in consecutive sessions, adding nearly 90 points or 4 percent on its way to its highest closing level so far this year. The Straits Times Index has cracked resistance at 2,380 points, and now analysts are predicting that the market could challenge the 2,400-point plateau at the opening of trade on Tuesday.
The global forecast for the Asian markets is solidly upbeat, thanks to better than expected economic data around the globe that suggests the economic slowdown may be losing steam. Auto makers may be in focus after General Motors officially declared bankruptcy - although the move has largely been priced in and actually is being met with some optimism. The European and U.S. markets ended sharply higher, and the Asian markets are tipped to trade in the green as well.
The STI finished sharply higher on Monday, boosted by gains among the property stocks and the financial shares. For the day, the index soared 50.99 points or 2.19 percent to close at 2,380.07 after trading between 2,341.48 and 2,389.15.
Among the gainers, CapitaLand jumped 5.5 percent, DBS Group Holding rose 2.5 percent and Olam climbed 11.3 percent, while Singapore Airlines also ended higher. Bucking the trend, Singapore Telecommunications ended in the red.
Wall Street puts forth a broadly positive lead as stocks were able to extend their gains for a third straight session on Monday, seeing a notably strong outing for the first trading day of June. The major averages all finished firmly in positive territory, with the NASDAQ and S&P 500 closing at their best levels of the year. Trader confidence was boosted by an influx of largely promising economic figures, with data from the Institute for Supply Management showing a slower pace of contraction in activity in the manufacturing sector in the month of April.
The report showed that the index of activity in the manufacturing sector rose to 42.8 in May from 40.1 in April, with a reading below 50 indicating a contraction. Economists had been expecting the index to edge up to a reading of 42.0. A turnaround in new orders contributed to the improvement in the sector, with the new orders index climbing to 51.1 in May from 47.2 in April. This marked the first time the index has been above 50 since November of 2007.
Further, construction spending unexpectedly increased in the month of April, according to a report released by the Commerce Department, with the unexpected growth reflecting a notable increase in spending on private construction. The Commerce Department also released a separate report showing that personal income unexpectedly rose in the month of April, with the increase partly due to the reduced taxes and increased social benefit payments associated with the government's economic stimulus plan.
On the corporate front, auto giant General Motors officially filed for bankruptcy on Monday morning. The Obama administration said Sunday that it has deemed GM's reorganization plan viable and will provide the company $30.1 billion in debtor-in-possession financing. President Barack Obama addressed GM's bankruptcy filing Monday, stressing that the government is acting as reluctant shareholders with a 60 percent stake in the company and hoping for a swift bankruptcy process.
Obama said that while GM's trip through bankruptcy will likely be longer than Chrysler's swift 31 days, he hopes that the embattled automaker will emerge from the Chapter 11 process quickly. The president defended his administration's actions with regarding to the automaker, stating that his people inherited a severe financial crisis unlike any we have seen in our time that put the government in an unwelcome position.
The major averages saw additional upside in the afternoon dealing and finished just off of their best levels of the day. The Dow closed up 221.11 points or 2.6 percent, at 8,721.44, the NASDAQ finished up by 54.35 points or 3.1 percent, at 1,828.68, and the S&P 500 rose 23.73 points or 2.6 percent to 942.87.
In economic news, Singapore is scheduled to release its purchasing managers' index for May on Tuesday. The PMI is forecast to show an index score of 50.2, up from 49.2 in April. The electronics PMI is called at 51.1, easing from 51.6 in the previous month.
Also, business receipts of the services sector in Singapore dropped 3.3 percent sequentially in the first quarter, after a 1.3 percent fall in the fourth quarter, the Department of Statistics said Monday. During the quarter, the steepest fall in receipts of 17.7 percent was in the transport and storage sector. However, the fastest growth of 18.5 percent was in education.
Year-on-year, business receipts dropped 2.3 percent in the first quarter. Receipts of the transport and storage sector fell 14 percent, and that of business services dropped 2.8 percent. All other services showed a rise in business receipts.
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