RTTNews - One day after ending the five-day winning streak in which it had added nearly 100 points or 4 percent, the Singapore stock market turned right back to the upside again on Tuesday. The Straits Times Index moved above support above the 2,595-point plateau, although now investors are bracing for heavy losses at the opening of trade on Wednesday.
The global forecast suggests that the Asian markets will open under some pressure, with weakness expected particularly from the financial, property and airline sectors. Commodities also may wilt, thanks to a sharp decline in the price of crude oil. The European and U.S. markets all finished sharply lower, and the Asian bourses also are tipped to move firmly to the downside.
The STI finished barely higher on Tuesday, as strength among the financials was enough to nudge the market into positive territory.
For the day, the index collected 3.49 points or 0.13 percent to close at 2,596.39 after trading between 2,588.65 and 2,633.02. Leading the gainers, DBS Group, Southeast Asia's biggest lender, added 0.63 percent.
The lead from Wall Street is broadly negative as stocks saw substantial weakness on Tuesday, when traders saw the day's positive economic news as already priced into the market. The major averages all moved sharply lower, adding to the losses posted in the previous session.
This morning, the Institute for Supply Management released a report showing that its manufacturing index jumped to 52.9 in August from 48.9 in July, with a reading above 50 indicating an expansion in the sector. With the increase, the index rose to its highest level since June of 2007. On average, economists had been expecting a more modest increase by the index to a reading of 50.2, which would have still indicated modest growth in the sector.
Separately, pending home sales increased by much more than expected in the month of July, according to a report released by the National Association of Realtors. The report showed that the pending home sales index rose 3.2 percent to 97.6 in July from a reading of 94.6 in June. The increase, which exceeded economist estimates of 1.5 percent growth, lifted the index to its highest level since June of 2007.
Meanwhile, the Commerce Department released a report showing that construction spending fell 0.2 percent in July following a downwardly revised 0.1 percent increase in June. Economists had expected spending to fall 0.2 percent compared to the 0.3 percent increase originally reported for the previous month.
In corporate news, online auction giant eBay (EBAY) announced that it has signed an agreement to sell its Skype communications unit for about $1.9 billion in cash and a $125 million note.
The major averages ended the session firmly in negative territory, just off their worst levels of the day. The Dow fell by 185.68 points or 2 percent to 9,310.60, the NASDAQ declined by 40.17 points or 2 percent to 1,968.89 and the S&P 500 fell by 22.58 points or 2.2 percent to close at 998.04.
In economic news, Singapore is on Wednesday scheduled to release August numbers for its purchasing managers' index, headlining a light day for Asian economic news. Analysts are expecting the PMI to show a score of 52 after coming in at 51.5 in July. Minus electronics, the PMI is expected to hold steady at the current score of 55.
Also, the International Monetary Fund said Singapore's current monetary policy settings were broadly appropriate, supporting domestic demand without undermining exchange rate stability. According to the lender, monetary policy should 'stay the course', until a recovery in the economy was clearly established. However, further on the path to recovery, the IMF said.
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