Singapore market – Expect some profit taking

Singapore:
Singapore market surged with the regional markets inresponse to the Fannie-Freddie rescue plan announced over the weekend. Thebenchmark STI opened more than 90 points up and claimed gradually to closeanother 30 points higher as investors’ confidence gradually increased. TheIndex closed the day up 122.82 points or 4.8% at 2,697.03. All the 30 STIcomponent stocks closed higher with Wilmar, Noble Group and City Dev led thegainers’ list. However, investors remained cautious as shown by the moderateturnover, with 0.97 billion shares worth S$1.59 billion transacted. Gainersled losers 363 to 168.

Wall Street:
Wall Street rallied on Monday, inline with globalmarkets, in reaction to the Fannie-Freddie rescue plan announced over theweekend. Investors were hopping that the plan could stabilise the financialand housing sectors. Banks and home builders’ shares surged. The Dow was up289.78 points or 2.6% to close at 11,510.74 while the tech-heavy Nasdaq closedup 13.88 points or 0.62% to 2,269.76. Light sweet crude increased marginallyby US$0.11 to close at US$106.34 a barrel.

Outlook:
Some profit taking activities are expected after a big surge yesterday. The moderate trading volume yesterdays showed that investors remain cautious. They may take some profit and wait for the next signals before making theirnext moves. While the US government rescue plan has stabilised the US mortgagemarket, other problems still remain unsolved. The oversupply of homes needs afew years to resolve and most important of all, the health of the US economy. The current plan only prevents a collapse of the US financial market and causea plunge in the US economy. It is not likely to prevent the economy fromslowing down or even enters into a recession. Although one uncertainty hasremoved, we still have more yet to be solved. Thus, the market is likely tocontinue to react strongly to favourable or unfavourable news, corporate andeconomic releases. Thus, for those who have bought during the last two days ofthe week may want to consider taking some profit. The rest of the investors may want to hold on totheir portfolio and want for better time to sell.