The winning streak has hit four sessions now for the Singapore stock market, which has collected nearly 180 points or 12 percent along the way. The Straits Times Index has finished higher in six of the last seven trading days, breaking through resistance at 1,650 points - and now analysts predict additional gains in Tuesday's trade.
The Asian markets draw a sharply positive global forecast, with major gains expected from the financial sector that has been so oversold in recent months - thanks to details on the U.S. plan to remove toxic assets. Some better than expected economic data out of the U.S. adds to the positive sentiment. The European markets finished sharply higher, as did the U.S. markets, and the Asian bourses are forecast to follow that lead.
The STI finished sharply higher on Monday, thanks to major gains among the financials, industrials and the energy stocks.
For the day, the index surged 67.16 points or 4.21 percent to close at 1,664.08 after trading between 1,608.72 and 1,664.08. Volume was 1,702.6 million shares worth 1.1056 billion Singapore dollars. There were 375 gainers and 114 decliners, with 774 stocks finishing unchanged.
Among the gainers, Keppel Corp and SembCorp Marine both rose 10 percent, while DBS Group rose 3.2 percent.
The lead from Wall Street is broadly positive as stocks moved sharply higher over the course of the trading day on Monday, with the major averages more than offsetting the losses posted in the two previous sessions to reach their best levels in over a month. The standout gains came after the Obama administration revealed its plan to help banks sell toxic assets.
The plan unveiled by Treasury Secretary Timothy Geithner will set up an investment fund to buy mortgage-related securities and other assets that are hurting the balance sheets of banks. The new Public Private Investment Program would combine taxpayer money with private funds, aiming to buy loans and free up banks to renew lending.
Geithner's plan involves using up to $100 billion in funds from the $700 billion financial rescue plan passed in 2008 in addition to capital from private investors to generate an estimated $500 billion to purchase the toxic assets, a number that could double to $1 trillion over time.
In economic news, existing home sales unexpectedly rose in the month of February, according to a report released by the National Association of Realtors, with sales rebounding after hitting a twelve-year low in the previous month. The report showed that existing home sales rose 5.1 percent to a seasonally adjusted annual rate of 4.72 million units in February from a pace of 4.49 million units in January. Economists had expected sales to slip to a 4.45 million unit rate.
Some of the strength on the day also came as investors reacted to Canadian integrated oil and natural gas companies Suncor Energy (SU) and Petro-Canada (PCZ) jointly announcing that the companies have agreed to merge in an all-stock deal. Furthermore, Walgreen (WAG) reported second quarter earnings that fell year-over-year but still pleased investors. Comparable stores sales increased 1.3 percent in the quarter, while comparable store front-end sales decreased 1.2 percent.
The major averages accelerated to the upside going into the close, ending the session at or near their best levels of the day. The Dow closed up 497.48 points or 6.8 percent at 7,775.86, the Nasdaq closed up 98.50 points or 6.8 percent at 1,555.77 and the S&P 500 closed up 54.38 points or 7.1 percent at 822.92.
In economic news, Singapore's Department of Statistics said on Monday that the consumer price index rose 1.9 percent year-on-year in February, at a much slower pace compared to a 2.9 percent rise in the previous month. Moreover, consumer prices increased less than economists' expectations of a 2.6 percent rise.
This was the fifth month in a row since October that the consumer price inflation has eased, following the 26-year high of 7.5 percent in each of three months in the second quarter of last year.
In February, transport and communication prices, having a weight of 22 percent in the index, fell 5 percent. However, food prices, with a weight of 23 percent, rose 4.3 percent and price of housing, with a weight 21 percent was up 6.6 percent. Excluding accommodation costs, consumer prices increased 0.5 percent in February.
On month, consumer prices fell 0.5 percent in February, following a 0.1 percent decline in January.
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