RTTNews - The Singapore stock market turned higher again on Tuesday, one day after writing a finish to the winning streak in which it had collected nearly 50 points or 1.9 percent. The Straits Times Index regained support at 2,300 points, and now analysts are predicting continued gains when the market kicks off trade on Wednesday.
The global forecast for the Asian markets is mildly positive, following some modestly optimistic economic and corporate news out of the United States and Europe. Financials and commodities are tipped to lead the move, although lagging crude oil prices may continue to weigh. The European markets finished sharply higher, while the U.S. bourses ended with more modest gains - and the Asian markets are also forecast to move higher.
The STI finished sharply higher on Tuesday, fueled by major gains among the financials, airlines and telecoms. For the day, the index jumped 43.91 points or 1.94 percent to finish at 2,310.55 after trading between 2,291.86 and 2,315.19.
Among the gainers, DBS Group, Oversea-Chinese Banking Corp and United Overseas Bank each gained more than 2 percent, while Singapore Airlines and Singapore Telecommunications also finished well into positive territory.
The lead from Wall Street is cautiously optimistic as stocks were unable to sustain any clear direction for the majority of the Tuesday's session following an influx of earnings and economic figures, but some late buying interest helped the markets to a positive finish. The major averages all finished in the green by moderate margins, extending their gains for a second straight session.
On the economic front, a report released by the Commerce Department revealed that retail sales increased by a little more than expected in the month of June, although the sales growth was due in large part to higher gasoline prices. The report showed that retail sales rose 0.6 percent in June following an unrevised 0.5 percent increase in May. Economists had been expecting retail sales to increase by a somewhat more modest 0.4 percent. However, after excluding increases in gas station and motor vehicle and parts sales, retail sales actually fell 0.2 percent for the month.
In a separate report, the U.S. Labor Department revealed that producer prices, a key measure of wholesale inflation, rose 1.8 percent in June. This followed a 0.2 percent increase in the previous month. Core producer prices, which exclude food and energy prices, climbed 0.5 percent.
On the earnings front, traders largely shrugged off better than expected earnings from Goldman Sachs (GS), with some suggesting that the news was already priced in following the rally among financial stocks that was seen on Monday. Johnson & Johnson (JNJ) also beat earnings expectations but saw subdued reaction amid the day's low trading volume.
The major averages saw modest upside in late day trading and were able to creep into positive territory. The Dow closed up by 27.81 points or 0.3 percent at 8,359.49, the NASDAQ advanced by 6.52 points or 0.4 percent to 1,799.73 and the S&P 500 rose by 4.79 or 0.5 percent to 905.84.
In economic news, Singapore will on Wednesday release retail sales figures for May. Forecasts call for sales to drop 10.6 percent on year after the 11.7 percent annual contraction in the previous month. Seasonally adjusted, sales are called higher by 0.4 percent on month after dropping 3.1 percent a month earlier.
Also, Singapore's GDP is expected to contract at a slower pace this year, a preliminary report from the Ministry of Trade and Industry showed on Tuesday. The economy is now expected to contract by 4 percent to 6 percent this year, an upward revision compared to a forecast of 6 percent to 9 percent contraction for the year made on April 14.
The Ministry also revised upwards the first quarter results. The report said, on a seasonally adjusted and annualized basis, the real GDP contracted 12.7 percent in the first quarter compared to the fourth quarter. This is an improvement over the 14.6 percent contraction estimated in May and a 19.7 percent fall estimated in April. On a yearly basis, the economy contracted 9.6 percent.
Moreover, the GDP rose a seasonally adjusted annualized 20.4 percent in the second quarter from the preceding three months, improving from a 12.7 percent fall seen in the previous quarter. Compared to the same period last year, the real GDP fell 3.7 percent in the second quarter, slower than a 9.6 percent fall seen in the first quarter.
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