The Singapore stock market on Wednesday wrote a finish to the three-day losing streak that had cost it more than 50 points or 3 percent along the way. The Straits Times Index is knocking on the door to resistance at 1,850 points, and analysts predict that the market will sweep through that level at the opening of trade on Thursday.
The global forecast for the Asian markets is generally upbeat, despite weak GDP numbers out of the United States. Financial stocks also could be in focus following a shakeup at the top of Bank of America. The European markets finished sharply higher, as did the U.S. markets - and the Asian bourses are predicted to follow that lead.
The STI finished sharply higher on Wednesday, powered by bargain hunting among the financials and the property stocks. For the day, the index surged 41.16 points or 2.28 percent to close at 1,849.57 after trading between 1,816.67 and 1,859.35.
Among the gainers, CapitaLand jumped 5.4 percent, while Singapore Telecommunications rose 3.3 percent, DBS Group Holdings gained 1.2 percent and Medtecs International rose 4.8 percent.
Wall Street offers a positive lead as stocks turned in a strong performance over the course of the trading day on Wednesday, with the major averages more than offsetting the losses posted in the two previous sessions. The strength in the markets came as investors shrugged off some weak GDP results and mulled over remarks from the Federal Reserve.
Before the opening bell, the Commerce Department released a report showing that GDP decreased at an annual rate of 6.1 percent in the first quarter, better than the 6.3 percent drop in the previous quarter, but considerably worse than the 4.7 percent decline economists had anticipated. A steep drop in private inventories played a big part in the sharper than expected contraction in GDP, however, with the drop in inventories subtracting 2.8 percentage points from first quarter GDP.
The substantial decline in inventories helped to offset a rebound in consumer spending, which rose by a bigger than expected 2.2 percent in the first quarter after falling by 4.3 percent in the fourth quarter and 3.8 percent in the third quarter.
Traders also kept a close eye on the Federal Reserve, which announced its latest decision on interest rates following a two-day monetary policy meeting. As expected, the Fed left its target range for the federal funds rate at 0 to 0.25 percent and reiterated that it expects that economic conditions are likely to warrant exceptionally low levels of the federal funds rate for an extended period.
The Fed's accompany statement was largely unchanged from the statement issued following its March meeting, although it did acknowledge that the pace of contraction in economic activity appears to be somewhat slower.
On the corporate front, Bank of America (BAC) was on investors' minds during the session as Chairman and Chief Executive Ken Lewis faced severe shareholder anger at the bank's annual meeting. After the bell, Lewis was removed as chairman but retained the title of CEO.
The major averages moved off their best levels of the day going into the close but remained firmly positive. The Dow closed up 168.79 points or 2.1 percent at 8,185.73, the NASDAQ closed up 38.13 points or 2.3 percent at 1,711.94 and the S&P 500 closed up 18.48 points or 2.2 percent at 873.64. With the upward moves, the NASDAQ ended the session at its best closing level in nearly six months, while the Dow set a more than two-month closing high and the S&P 500 set a three-month closing high.
In economic news, Singapore saw seasonally adjusted unemployment rise 3.2 percent on year in the first quarter of 2009, the Ministry of Manpower said in a statement on Thursday. That was in line with analyst expectations following the revised 2.5 percent annual increase in the previous three months. The original reading was 2.6 percent. A total of 12,600 people lost their jobs in the first quarter, the ministry said, including 9,000 in the manufacturing sector. In the previous quarter, Singapore had lost 9,410 jobs.
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