Singapore Stocks Mat Regain Support At 2,600 Points

(RTTNews) - The Singapore stock market has closed lower now in three straight sessions and in four of the last five, on Friday crashing through support at 2,600 points to come to rest at its lowest level since October 5, 2006. Now the Straits Times Index is expected to rebound sharply on Monday, perhaps reclaiming that former level of support.

The global forecast for the Asian markets is cautiously optimistic, in spite of worse than expected unemployment numbers out of the United States on Friday. There was also some mixed news out of the financial sector, which sent the U.S. markets to a mixed close.

But the biggest boost came on Sunday when the U.S. government took over control of mortgage giants Freddie Mac and Fannie Mae in a move to bolster the housing markets and protect and stabilize the financial system. The chief executives at the two firms will be replaced as part of the plan, while the Federal Housing Finance Agency will assume the power of management at the companies - and the financials are expected to rebound on Monday.

The STI finished sharply lower on Friday, capping a weekly decline of 6.1 percent - its largest weekly drop since August, 2007. The financials fell under heavy selling pressure throughout the session, while the properties also wound up sharply lower.

For the day, the index lost 51.84 points or 1.97 percent to close at 2,574.21 after trading between 2,554.04 and 2,585.17. Volume was 1.10 billion shares worth 1.57 billion Singapore dollars. There were 390 decliners and 136 gainers, with 837 stocks remaining unchanged.

Wall Street provides a mixed lead for the market as stocks ended Friday's session somewhat recovered after seeing significant selling pressure earlier in the day. While a disappointing monthly employment report sent jittery investors out of the stock markets early on, some investors looked for bargains in the afternoon following a dismal performance in the previous session.

Before the markets opened, the Labor Department released its highly anticipated monthly report on the employment situation, showing that employment continued to decrease in the month of August. The continued job losses helped to lift the unemployment rate to 6.1 percent, its highest level since September 2003.

Merrill Lynch (MER | Quote | Chart | News | PowerRating) added to the early selling pressure after a Goldman Sachs analyst downgraded the stock to a Sell rating with the expectation that the company will see further write-downs. Nonetheless, the stock ended the day higher by 2 percent. However, a Sandler O'Neill & Co. analyst said he expects Lehman Brothers (LEH | Quote | Chart | News | PowerRating) to survive the credit crisis, despite seeing considerable volatility in recent weeks on speculation that it will strike a deal to receive a capital injection.

The major averages moved higher in late day trading, although the Nasdaq could not hold onto its gain and ended the session below the unchanged line. While the Nasdaq closed down 3.16 points or 0.1 percent at 2,255.88, the Dow closed up 32.73 points or 0.3 percent at 11,220.96 and the S&P 500 closed up 5.48 points or 0.4 percent at 1,242.31.

Despite the mixed performance, the major averages all posted notable losses for the week due in large part to Thursday's sell-off. The Dow fell 2.8 percent for the holiday-shortened week, while the Nasdaq and the S&P 500 posted weekly losses of 4.7 percent and 3.2 percent, respectively.

In economic news, Singapore will on Monday provide FX reserves data for August, with forecasts calling for a surplus of $174.6 billion. That's down from $174.96 a month earlier.

On the corporate front, management investment company The Singapore Fund saw Q3 net income of $891,000 for nine-month total of $1,735,000. The Fund had 86.72 percent of its net assets invested in Singapore equity securities. The balance of the Fund's net assets was in the form of time deposits and other cash equivalents denominated in Singapore Dollars (12.93 percent), U.S. dollars (0.10 percent) and other assets less liabilities of (0.25 percent). In the year ago period, total net assets were $193.9 million based on 9,274,172 shares outstanding.

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