Singapore market – Likely to recover

Singapore
Singapore market fell for a third day with moderate volume. The 345-point plunge in Dow on Thursday night due to disappointing employment number had caused the Singapore market to follow suit. Investors were worried about the further effect of the weakening US economy on the local economy which had just been downgraded by economists. The STI opened more than 60 points down but recovered slightly towards the closing. The Index was down 51.84 points or 2.0% for the day to close the week at 2,574.21. Turnover remained moderate with 1.1 billion shares worth S$1.6 billion transacted. Losers led gainers 390 to 136. For the week, the Index was down 165.74 points or 0.6%.

Wall Street
Dow closed moderately up after early losses. Dow opened down with the Index dropped more than 150 points at one point during the morning trade, in response to a weaker than expected employment number for August. The Department of Labour said in a release that the number of nonfarm payrolls decreased at a higher than expected rate of 84 thousands in August, compared to consensus estimate of 75 thousands. Unemployment rate surged to 6.1% in August from 5.7% in July and consensus estimate of 5.7%. The market recovered during the afternoon trade as investors hoped that the US Treasury would take steps over the weekend to rescue mortgage finance companies Fannie Mae and Freddie Mac. The Dow increased 32.73 points or 0.3% to close at 11,220.96 while the tech-heavy Nasdaq was downed 3.16 points or 0.1% to 2,255.88. Light sweet crude fell US$1.66 to close the NYMEX at US$106.23 a barrel.

Outlook
Singapore market is likely to open up due in response to the positive news that the US Treasury is taking over the Mortgage Giants Fannie Mae and Freddie Mac to prevent them from collapse. Similar to the rescue of Bear Stearns in March, the market is likely to recover from the recent low with high possibility that the benchmark STI above the 2,700 level in the near future. Continue to buy.