The Singapore stock market has alternated positive and negative finishes through the last five trading days since ending the four-day winning streak in which it collected more than 120 points or 6.5 percent en route to a fresh eight-month high. The Straits Times Index fell through support at 1,850 points, and analysts predict that the market could slide a bit further at the opening of trade on Thursday.
The global forecast for the Asian markets is mixed with a touch of downside, thanks to a series of disappointing quarterly reports. Financials are expected to remain under pressure, although some of the bigger exporters and technology stocks may provide support. The European stock markets finished sharply higher and the U.S. markets ended mostly lower - and the Asian markets are predicted to see equal dichotomy.
The STI finished sharply lower on Wednesday, as the financial shares fell under heavy selling pressure throughout the trading day, while the telecom issues and property stocks also finished in the red.
For the day, the index plunged 43.84 points or 2.32 percent to close at 1,843.41 after trading between 1,830.15 and 1,875.82. Volume was 1.72 billion shares worth 1.36 billion Singapore dollars. There were 303 decliners and 172 gainers, with 753 stocks finishing unchanged.
Among the decliners, DBS Group was down 1.8 percent, Singapore Telecom was off 1.59 percent, United Overseas Bank shed 1 percent and Oversea-Chinese Banking Corp drifted 2.1 percent lower, while CapitaLand, City Developments, Keppel Land, Singapore Airlines and Noble Group also ended in the red.
The lead from Wall Street is modest pessimism as stocks experienced considerable volatility over the course of the trading day on Wednesday, with the major averages unable to sustain any significant moves. The choppy trading came as investors continued to digest mixed earnings news.
Early on in the session, traders reacted negatively to quarterly results from Morgan Stanley (MS), which became one of the few major financial companies to report weaker than expected first quarter results. Morgan Stanley reported a much wider than expected first quarter loss of $0.57 per share and revealed that it has slashed its quarterly dividend by 80 percent to $0.05 a share.
Separately, Boeing (BA) reported first quarter net income of $610 million, down 50 percent from last year quarter's $1.21 billion. Revenues for the quarter rose 3 percent to $16.5 billion from last year's $15.99 billion. Looking forward, the aerospace giant reaffirmed its full year revenue guidance but lowered its earnings guidance due to lower earnings at its commercial airplanes business.
Meanwhile, fast food giant McDonald's (MCD) reported first quarter net income of $0.87 per share, compared to $0.81 per share in the same quarter of last year, while analysts expected the company to report earnings of $0.82 per share.
In other news, Treasury Secretary Timothy Geithner spoke to the Economics Club of Washington earlier in the day, hinting that policymakers might be forced to alter their recovery strategies as the global financial crisis drags on. He explained that the revised estimate from the International Monetary Fund for global growth could spark a change in policy. The IMF lowered its 2009 outlook, now predicating a contraction of 1.3 percent for the year compared to its previous estimate of 0.5 percent growth.
The major averages pulled back sharply going into the close, with the Dow and the S&P 500 falling firmly into negative territory. While the NASDAQ managed to hold onto a modest gain, closing up 2.27 points or 0.1 percent at 1,646.12, the Dow closed down 82.99 points or 1.0 percent at 7,886.57 and the S&P 500 closed down 6.53 points or 0.8 percent at 843.55.
In economic news, Singapore is on Thursday scheduled to release March numbers for its consumer price index. Analysts are predicting an increase of 1.6 percent on year, easing from the 1.9 percent annual expansion in February.
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