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Singapore Bourse Unlikely To Hold 3,000-Point Level

The Singapore stock market bounced right back to the upside again on Wednesday, one session after it had ended the four-day winning streak in which it had gathered almost 20 points or 0.7 percent. The Straits Times Index finished just above the 3,000-point plateau, although now investors are bracing for renewed consolidation when the market kicks off trade on Thursday.

The global forecast for the Asian markets is mixed with a downside bias, thanks to profit-taking and soft employment data out of the United States. Payroll processor Automatic Data Processing reported much weaker than expected private sector job growth. Adding to the cautious sentiment are several weaker than expected manufacturing reports in Europe, in addition to a jump in the Eurozone's unemployment rate. The European and U.S. markets were mixed to lower, and the Asian bourses figure to follow suit.

The STI finished modestly higher on Wednesday following gains from the financial shares.

For the day, the index climbed 27.57 points or 0.93 percent to finish at the daily high of 3,006.14 after trading as low as 2,985.86. Volume was 3.29 billion shares worth 1.29 billion Singapore dollars. There were 305 gainers and 127 decliners.

Among the actives, DBS Group Holdings jumped 1.4 percent, while United Overseas Bank climbed 0.9 percent, Oversea-Chinese Banking Corp added 0.5 percent and SMRT shed 1.2 percent.

The lead from Wall Street offers little clarity as stocks turned mixed on Wednesday after initially moving lower on the weaker than expected data, with traders eventually shrugging off a disappointing private sector jobs report.

Payroll processor Automatic Data Processing said that private sector employment increased by 119,000 jobs in April following a downwardly revised increase of 201,000 jobs in March. Economists had expected an increase of 183,000 jobs compared to the addition of 209,000 jobs originally reported for March. The data raised some concerns about Friday's more closely watched monthly employment report from the Labor Department.

A separate report from the Commerce Department showed that new orders for manufactured goods fell by 1.5 percent in March following a 1.1 percent increase in February. Orders had been expected to decrease by 1.6 percent.

In corporate news, MasterCard (MA) reported better than expected first quarter results - although revelation of an increase in rebates and incentives may have raised concerns about future results. Cable giant Comcast (CMCSA) also ended the day in the red despite reporting stronger than expected first quarter earnings growth.

Meanwhile, shares of Standard Microsystems (SMSC) moved sharply higher after agreeing to be acquired by Microchip Technology (MCHP) for $829 million in cash. Charming Shoppes (CHRS) also posted a substantial gain after the retailer agreed to be acquired by Ascena Retail Group (ASNA) for $890 million in cash.

The major U.S. averages finished mixed as the NASDAQ rose 9.41 points or 0.3 percent to finish at 3,059.85, while the Dow edged down 10.75 points or 0.1 percent to end at 13,268.57 and the S&P 500 dipped 3.51 points or 0.3 percent to 1,402.31.

On the economic front, Fitch Ratings said on Wednesday that downward rating pressure could gradually increase for Singapore banks, as their credit profiles become increasingly linked to Asia's high-growth markets.

Nonetheless, the maintenance of strong balance sheets coupled with Singapore's conservative regulator, would help the banks to preserve financial profiles and high credit ratings in the near-to medium-term. This is reflected in the Stable rating outlook, Fitch said.

The agency noted that strict regulations play a role in Singapore banks having strong loss-absorption capacities and demonstrating their resilience through economic cycles. Without these offsetting features, the risk profile of high-growth markets could begin to weigh on the banks' high ratings.

by RTT Staff Writer

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