The Singapore stock market has closed lower now in three consecutive trading days, dropping more than 80 points or 2.8 percent in that span. The Straits Times Index finished just below the 2,925-point plateau, although now investors are anticipating a modest recovery when the market kicks off trade on Tuesday.
The global forecast for the Asian markets is mixed with a slight upside bias, as investors are expected to go shopping after the bourses took heavy damage on Monday. The upside may be limited by concerns about the new government in Greece, which has vowed to end austerity measures and reject the terms of Greece-Troika bailout deal. The European and U.S. markets were mixed to higher, and the Asian bourses figure to follow suit.
The STI finished brutally lower on Monday following heavy damage among the financial shares and the property stocks.
For the day, the index plummeted 65.64 points or 219 percent to finish at 2,924.95 after trading between 2,918.14 and 2,950.62. Volume was 2.44 billion shares worth 1.38 billion Singapore dollars. There were 370 decliners and 61 gainers.
Among the decliners, CapitaLand shed 5.4 percent, while Hongkong Land Holdings plunged 5.0 percent, CapitaMalls Asia fell 3.1 percent, UOB plummeted 4.2 percent, OCBC lost 1.8 percent and DBS was off 1.6 percent.
The lead from Wall Street is cautiously optimistic as stocks showed a lack of direction on Monday, with traders expressing uncertainty about the situation in Europe following recent election results. Selling pressure remained relatively subdued, however, limiting the downside for the markets. The markets recovered from weakness in early trading but ended the day nearly flat.
The slow start reflected a negative reaction to election results in France and Greece, which some saw as a setback to the progress achieved thus far on the European debt crisis.
Francois Hollande won a run-off election against French President Nicolas Sarkozy and will become France's first Socialist president since 1995. Hollande has expressed significant opposition to using austerity measures to address the European debt crisis, arguing that the focus should be more on economic growth than cutting government spending.
Additionally, the results of Greek elections pointed to a hung parliament, with no single party getting adequate votes to form a government. Many Greek voters turned to anti-bailout parties.
Among individual stocks, Vertex Pharmaceuticals (VRTX) moved sharply higher after the biotech company released data showing that its cystic fibrosis combination therapy resulted in significant improvements in lung function. Shares of Tyson Foods (TSN) also jumped after the meat producer reported quarterly earnings that beat estimates.
Meanwhile, Cognizant Technology (CTSH) came under pressure after the information technology services provider reported first quarter earnings growth but lowered its full-year guidance. AIG (AIG) also closed in the red after the company said the Treasury has priced an offering of 163.9 million shares of its common stock at $30.50 per share.
The major averages eventually finished the session mixed, as the Dow fell 29.74 points or 0.2 percent to finish at 13,008.53, while the NASDAQ edged up 1.42 points or 0.1 percent to end at 2,957.76 and the S&P 500 crept up by 0.48 points or less than a tenth of a percent to 1,369.58.
On the economic front, Ong Chong Tee, Deputy Managing Director of Monetary Authority of Singapore said on Monday that monetary policy should act decisively to ease short-term inflationary pressures driven by strong demand. Ong expects inflation to ease gradually through the year, but along a somewhat elevated trajectory.
Although productivity improvements arising from the significant economic restructuring will help to prevent higher costs from fueling strong price increases, the central bank is firmly committed to objective of price stability over the medium term, he told a conference.
by RTT Staff Writer
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