RTTNews - The Singapore stock market on Tuesday snapped the losing streak that had reached four sessions and cost it more than 130 points or 5 percent in the process. The Straits Times Index closed just below the 2,600-point plateau, but now investors are expecting the market to turn back to the downside when it kicks off trade on Wednesday.

The global forecast for the Asian markets is fairly pessimistic as investors are likely to be cautious ahead of the Federal Open Market Committee's comments on Wednesday about the state of the U.S. economy. Financials and properties are likely to be under pressure, along with some of the resource stocks. The European and U.S. markets finished sharply lower, and the Asian bourses are also expected to trade to the downside.

The STI finished sharply higher on Tuesday, boosted by positive GDP data. Financials were the big gainers, while the telecoms also finished higher.

For the day, the index surged 47.95 points or 1.88 percent to close at 2,597.30 after trading between 2,565.96 and 2,607.00.

Finishing higher, Oversea-Chinese Banking Corp jumped 3.6 percent, while Singapore Telecommunications climbed 1.9 percent, DBS Group was up 0.6 percent and United Overseas Bank added 2 percent.

Wall Street offers a negative lead as stocks posted notable losses on Tuesday, with traders doing some additional profit taking ahead of key economic data due out in the second half of the week. The major averages all ended the day firmly in negative territory, adding to the moderate losses posted in the previous session.

On the economic front, traders largely shrugged off the Labor Department's report showing a much bigger than expected increase in productivity in the second quarter. The growth came as hours worked fell at a faster pace than output. At the same time, the report also showed a steep drop in unit labor costs. The report said that productivity increased by 6.4 percent in the second quarter compared to a downwardly revised 0.3 percent increase in the first quarter. Economists had expected productivity to increase by 5.5 percent.

Meanwhile, the Labor Department also said that unit labor costs fell by 5.8 percent in the second quarter following a revised 2.7 percent decrease in the first quarter. The steep drop in costs exceeded the expectations of economists, who had expected a 2.5 percent drop.

Separately, the Commerce Department released a report showing that wholesale inventories fell by much more than expected in the month of June, although the report also showed a modest increase in wholesale sales. The report showed that wholesale inventories fell 1.7 percent in June following a revised 1.2 percent decrease in May. Economists had expected inventories to fall 0.9 percent compared to the 0.8 percent drop originally reported for the previous month.

Traders are also looking to the two-day Federal Open Market Committee meeting that began today, although the Fed's rate decision is not expected to be revealed until tomorrow afternoon. The central bank is widely expected to keep the fed funds futures rate unchanged. However, the Fed's commentary on growth and inflation and any additional information on quantitative easing measures have the potential to move the markets.

The major averages all ended the day notably lower, although they were well off their worst levels of the day. The Dow closed down by 96.50 points or 1 percent at 9,241.45, the NASDAQ slipped by 22.51 points or 1.1 percent to 1,969.73 and the S&P 500 fell by 12.75 points or 1.3 percent to 994.35.

In economic news, Singapore's gross domestic product expanded by 20.7 percent in the second quarter of 2009 compared to the previous three months, the Ministry of Trade and Industry said in a revised report on Tuesday, beating estimates for a 19.2 percent gain following the preliminary report of 20.4 percent. On an annual basis, GDP contracted by 3.5 percent versus forecasts for a 4 percent decline after the 3.7 percent fall in the preliminary report.

Gains among the manufacturing and financial sectors are most responsible for the improvement, the MTI said. For the first half of the year, the Singapore economy contracted by 6.5 percent. The MTI is maintaining its GDP growth forecast for all of 2009 at between -4 and -6 percent.

Also, Singapore's non-oil domestic exports dropped 14 percent on year in the second quarter after falling 26 percent in the first quarter, the International Enterprise Singapore said on Tuesday. Sequentially, the NODX increased a seasonally adjusted 7.6 percent in the second quarter, compared to the 7.4 percent decline in the previous quarter.

Electronic NODX decreased 23 percent year-on-year in the second quarter, following a 32 percent fall in the preceding quarter. At the same time, non-electronic NODX was down 8.6 percent, after falling 21 percent in first quarter.

Meanwhile, total trade declined 27 percent annually in the second quarter, compared to the 28 percent fall in the previous quarter. Total trade rose a seasonally adjusted 3.8 percent sequentially in the second quarter, after a 14 percent decline in the first quarter.

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