The Singapore stock market has finished lower now in back-to-back sessions since the end of the market's six-day winning streak in which it gathered more than 430 points or 22 percent on its way to a fresh seven-month high. The Straits Times Index slid through support at 2,170 points, and now analysts are pointing to further downside correction at the opening of trade on Tuesday.
The Asian markets draw negativity from the global forecast as many of the regional markets are expected to see continued profit taking after strong rallies last week. The financials may see some selling pressure after soaring last week, while the technology issues may provide a measure of support. The European markets ended sharply lower, as did the U.S. bourses, and the Asian markets are also tipped to head into the red.
The STI finished sharply lower on Monday, thanks to profit taking after last week's rally. The financials were hit especially hard, as were the property stocks.
For the day, the index dropped 72.11 points or 3.2 percent to close at 2,166.10 after trading between 2,164.87 and 2,240.28. Volume was 4.0 billion shares, with 396 decliners and 225 gainers.
Among the decliners, DBS fell 5.6 percent, while Oversea Chinese Banking Corp was down 5.7 percent, United Overseas Bank finished 5 percent lower, Neptune Orient Lines shed 6.3 percent, CapitaLand shed 4 percent, City Development was 5.2 percent lower and Singapore Telecoms fell 4.9 percent.
The lead from Wall Street is weak as stocks moved mostly lower during trading on Monday after turning in a strong performance last week. The major averages all closed firmly in negative territory, although the tech-heavy NASDAQ posted a relatively modest loss.
The weakness in the markets was largely due to profit taking, with traders cashing in on the market's recent gains amid a lack of economic data and limited corporate news. Uncertainty about the outlook for the markets inspired some of the profit taking, with some traders questioning whether stocks can extend their recent upward move amid expectations of a lack of significant catalysts in the near future.
Banking stocks helped to lead the way lower after U.S. Bancorp (USB), BB&T (BBT), and Capital One (COF) all revealed plans to sell common stock in order to raise proceeds to repay funds received under the government's financial bailout program.
Some negative sentiment was also generated by news that billionaire investor Warren Buffett's Berkshire Hathaway (BRK-A) reported a first quarter net loss of $1.53 billion compared to a year-ago profit of $940 million. Berkshire Hathaway's results were hurt by a drop in revenues as well as huge investment and derivative losses primarily on write-downs on investments in ConocoPhillips (COP).
In other news, President Barack Obama spoke earlier in the day, saying that a meeting with leading health care groups resulted in a pledge to reduce health care costs by $2 trillion over the next decade. The president said that the groups have voluntarily come together to make an unprecedented commitment to cut the rate of growth of national health care spending by 1.5 percentage points each year over the next ten years. Obama also urged Congress to work to reform health care by the end of the year, stressing that reform went beyond reducing costs.
While the major averages all finished the day in the red, the NASDAQ closed down only 7.76 points or 0.5 percent at 1,731.24. Meanwhile, the Dow fell 155.88 points or 1.8 percent to 8,418.77 and the S&P 500 closed down 19.99 points or 2.2 percent at 909.24.
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