The Singapore stock market has finished higher in two of four 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 is again closing on resistance at 1,900 points, and now analysts predict that the market will have another opportunity to break through that plateau at the opening of trade on Wednesday.
The global forecast for the Asian markets is fairly optimistic, despite some weaker than expected corporate earnings news. But the financials are expected to climb following positive comments from U.S. Treasury Secretary Timothy Geithner. The European markets were mixed and largely near the unchanged line, while the U.S. markets ended sharply higher - and the Asian markets are tipped to land somewhere in between.
The STI finished modestly higher on Tuesday after plummeting as much as 3 percent in morning trade. The property stocks were down, but most of the other sectors were mixed and provided enough strength to lift the market into positive territory.
For the day, the index was up 12.40 points or 0.66 percent to close at the daily high of 1,887.25 after dipping as low as 1,813.90. Volume was 1.6 billion shares, with decliners outnumbering gainers 370 to 140.
Finishing lower, CapitaLand fell 1.8 percent, City Development slid 0.7 percent and Keppel Corp. closed 1.5 percent lower, while Singapore Telecommunications and Oversea-Chinese Banking Corp also ended in the red.
Among the gainers, SembCorp Marine was up 0.9 percent, DBS ended 0.5 percent higher and Singapore Technologies added 1.2 percent, while Singapore Airlines also ended higher.
Wall Street offers a broadly positive lead as stocks showed a strong upward move over the course of the trading day on Tuesday, partly offsetting the steep losses posted in the previous session. While stocks saw initial weakness on disappointing earnings news, a positive reaction to comments from Geithner drove the markets higher.
The initial weakness came after Dow component Merck (MRK) reported first quarter earnings that fell short of analyst estimates and lowered its full year revenue guidance. Caterpillar (CAT) also slashed its full-year guidance, although it reported much better than expected adjusted first quarter earnings.
In other earnings news, chemical giant DuPont (DD) reported first quarter earnings that fell year-over-year and lowered its full-year guidance. The company's downwardly revised earnings guidance brought it in line with analyst estimates.
The turnaround by the markets was partly due to comments from Geithner, who assured the Congressional Oversight Panel that there is enough money left in the government's $700 billion financial rescue program to stabilize the financial system. Geithner said there is at least $134.4 billion in funds left. The Treasury Secretary also said that the vast majority of U.S. banks have enough capital and hinted that the credit markets may be thawing following their deep freeze.
Indicators on interbank lending, corporate issuance and credit spreads generally suggest improvements in confidence in the stability of the system and some thawing in credit markets, Geithner said.
The major averages moved to the upside going into the close, ending the session at or near their best levels of the day. The Dow closed up 127.83 points or 1.6 percent at 7,969.56, the NASDAQ closed up 35.64 points or 2.2 percent at 1,643.85 and the S&P 500 closed up 17.69 points or 2.1 percent at 850.08.
In economic news, Malaysia is on Wednesday scheduled to release March numbers for its consumer price index and foreign reserves numbers through April 15. Inflation is forecast to increase by 3.6 percent on year, slowing slightly from the 3.7 percent annual expansion in February. Foreign reserves are predicted at $88.59 billion, up from $87.82 billion in the previous week.
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