RTTNews - The Singapore stock market has stretched its winning streak to three sessions, gathering nearly 85 points or 3.4 percent along the way. The Straits Times Index closed just shy of the 2,630-point plateau, but now investors are anticipating a mild correction to the downside by the opening of trade on Thursday.
The global forecast for the Asian markets is mixed with a touch of downside, but they are not expected to show much movement. Housing, technology and airline stocks could see solid gains, but they're likely to be countered by selling among the railroad stocks and the commodities. European markets ended firmly in negative territory, while the U.S. markets ended barely above the unchanged line - and the Asian markets are projected to trade slightly to the downside.
The STI finished slightly higher on Wednesday, as the airlines were up and the financials were mostly higher.
For the day, the index collected 9.67 points or 0.37 percent to close at 2,628.43 after trading between 2,602.63 and 2,638.99. Volume was 3.18 billion shares worth 1.78 billion Singapore dollars. There were 357 gainers and 183 decliners, with 825 stocks finishing unchanged.
Among the actives, Singapore Airlines, United Overseas Bank and Oversea-Chinese Banking Corp all finished higher, while Singapore Telecommunications, Keppel Corp and DBS Group Holdings ended with modest declines.
Wall Street offers not much in the way of guidance as stocks finished Wednesday's session little changed, with the day's trading marred by choppy movement despite largely positive news on the economic front. The major averages closed only slightly higher after turning in another lackluster trading session. Some traders remained on the sidelines ahead of the Thursday's weekly jobless claims report, which is expected to show a modest decrease in first-time claims for unemployment benefits.
Some of the day's early upside came on the heels of data on new home sales, which increased by much more than expected in the month of July, according to a report released by the Commerce Department. The report showed that new home sales surged up by 9.6 percent to an annual rate of 433,000 in July from the revised June rate of 395,000. Economists had been expecting sales to edge up to 390,000 from the 384,000 originally reported for the previous month.
Some positive sentiment was also generated by a report from the Commerce Department showing a much bigger than expected increase in durable goods orders in the month of July, with the growth largely due to a substantial rebound in orders for transportation equipment. The report showed that new orders for durable goods jumped 4.9 percent in July following a revised 1.3 percent decrease in June. Economists had expected orders to increase by 3.2 percent compared to the 2.2 percent decrease that had been reported for the previous month.
Excluding an 18.4 percent increase in orders for transportation equipment, durable goods orders increased by a much more modest 0.8 percent in July compared to a 2.5 percent increase in June. The increase came in below economist estimates of 1.0 percent growth.
In other news, Atlanta Federal Reserve Bank President Dennis Lockhart said earlier today that although he believes the worst of the economic downturn has passed, the economic recovery will be slow and will contribute to a protracted period of high unemployment.
The major averages showed a slight upward move going into the close, ending the day just above the unchanged line. The Dow closed up by 4.23 points at 9,543.52, the NASDAQ gained 0.20 points to finish at 2024.43 and the S&P 500 rose by 0.12 to 1,028.12.
In economic news, Singapore's industrial output rose 12.4 percent year-on-year in July, reversing a revised 9 percent fall in the preceding month. Economists expected output to decline 1 percent. Month-on-month, on a seasonally adjusted basis, industrial output climbed 23 percent, in contrast to a revised 9 percent fall in the preceding month. Economists expected a 7.1 percent rise. Excluding the biomedical sector, industrial output fell 7.4 percent on a yearly basis in July, but rose a seasonally adjusted 7.7 percent compared to the previous month.
Also, Fitch Ratings said on Wednesday that the stable outlook on Singapore local banks' 'AA minus' credit ratings has been maintained. The firm said that even though Singapore's bank's asset quality and earnings deteriorated slightly, their ratings remain intact in the current economic downturn, thanks to their high capital cushion and strong loss absorption abilities.
In its semi-annual review of Singapore's banks, Fitch said, despite difficult operating conditions, the deterioration in the banks' strong financial profiles has only been modest so far and the agency expects their credit profiles to remain adequate, as a result of their satisfactory earnings capacity and strong capital buffers.
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