The Singapore stock market has finished higher now in five consecutive sessions, collecting more than 175 points or 10 percent along the way en route to a 12-week high. The Straits Times Index broke through the 1,850-point plateau intraday, but was unable to close above that level - and now investors are bracing for a significant retreat at the opening of trade on Tuesday.
The global forecast for the Asian markets is negative as investors are expected to lock in profits from recent winning streaks ahead of the opening of corporate earning season - which kicks off this week. Some other disappointing news out of the corporate world added to the negative sentiment, which prompted the European and U.S. markets to finish firmly in the red - and the Asian bourses are tipped to follow that lead.
The STI finished sharply higher on Monday, thanks to major gains among the financial stocks. For the day, the index gained 27.11 points or 1.5 percent to close at 1,847.98 after trading between 1,827.39 and 1,868.38. Among the gainers, SembCorp Marine rose 9.1 percent and Oversea-Chinese Banking Corporation jumped 3.7 percent.
The lead from Wall Street is pessimistic as stocks regained some ground over the course of afternoon trading on Monday, but they remained mostly negative after trending lower throughout much of the morning. The major averages all ended the day lower after closing higher in the four previous sessions. The notable decline seen in morning trading came as traders cashed in some of the recent gains amid some disappointing corporate news and negative analyst comments.
Sun Microsystems (JAVA) helped to lead the technology sector lower after media reports said that acquisition talks between IBM (IBM) and Sun have collapsed, putting the deal at risk of failure. The reports said that Sun's board rejected a formal acquisition offer by IBM on Saturday, sending a notice terminating Sun's deal to hold talks exclusively with IBM. In response, IBM reportedly withdrew its offer to acquire Sun on Sunday.
Additionally, bank stocks saw notable weakness in reaction to negative comments from veteran banking analyst Mike Mayo, who recently left Deutsche Bank AG to join Calyon Securities. Mayo initiated coverage of several banks with either Sell or Underperform ratings, citing concerns about increased loan losses and the belief that government actions might not help as much as expected.
In other news, the U.S. Treasury Department has extended the deadline for applications to its public-private initiative to buy up distressed assets from banks. The deadline has been pushed out two weeks until April 24. The treasury's program allows fund managers to participate with the government in an initiative aimed at taking distressed assets off the balance sheets of banks. These assets have become nearly impossible to sell since the financial turmoil that set in last year, forcing banks to announce huge write-offs and putting the overall financial system in jeopardy.
Meanwhile, President Barack Obama told Turkish lawmakers Monday that he stood behind their bid to join the European Union. The president also stressed that the U.S. remains a friend to the Muslim world, even as the country fights Islamic terrorism.
The major averages showed a notable upward move going into the close but still ended the day in the red. The Dow closed down 41.74 points or 0.5 percent at 7,975.85, the NASDAQ closed down 15.16 points or 0.9 percent at 1,606.71 and the S&P 500 closed down 7.02 points or 0.8 percent at 835.48.
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