Pre-Market Open Commentary for 24 February 2010
DJIA: 10282.41 -100.97
Nasdaq Composite: 2213.44 -28.59
US stocks tumbled on Tuesday following a plunge in US consumer confidence by more than 10 points in February, reflecting investors’ growing pessimism about the strength of the economic recovery as consumer spending fuels about two-thirds of US economic growth. The Consumer Confidence Index declined to 46.0 in February, worse-than-expectations of 54.8, from a revised 56.5 in January. Separately, the home price index fell 3.1% YoY in December, in line with expectations, from a YoY decline of 5.3% in November, but rose 0.3% from November, implying that the housing market is continuing to recover.
The corporate results of retailers were largely ahead of expectations. Home Depot returned to a profit in 4QFY09, which was better than expectations, from losses in 4QFY08 but issued a cautious 2010 outlook amid the still-fragile economic recovery. Target and Sears also reported higher-than-expected quarterly profits.
All the major indices ended lower with the Dow Jones Industrial Average losing 0.97% while S&P 500 fell 1.21% to 1,094.60. Nasdaq composite lost 1.28%.
Expect market sentiment to take leads from the highly-anticipated congressional testimony by the US Fed Chairman over Wednesday and Thursday. The Chairman is expected to discuss the economy and monetary policy and more importantly, may provide indications on the central bank’s plans to close out some of the emergency programs put in place during the height of the financial crisis. The economic reading on new home sales for January is also scheduled on Wednesday.
US light crude oil for April delivery fell US$1.45 to settle at US$78.85 a barrel.
In Singapore today:
Most of the regional bourses rallied on Tuesday as concerns over sovereign debt woes in Greece eased. Increasing hope that US Fed Chairman will keep interest rates at the current low levels and news of Dubai injecting fresh funds into heavily indebted Dubai World further lifted market sentiment. The Hang Seng index reversed from a 250 points decline to close 245.73 points or 1.2% higher, prompted by talks of goodies to be announced in tomorrow's budget speech. This is turned lifted most stocks in the local bourse from their nadir lows. The Taiex index also gained 0.49% and Kospi edged up 0.11%. The STI closed 25.09 points, or 0.91%, to 2782.55, led by local banks. For every stock that fell, 1.74 rose. Turnover remained light with 1.19bil shares with a value of $1.27bil traded.
Shares of Genting fell 1.5 cent at 95.5 cents after failing to breach the 98 cents resistance point. It earlier touched a low at 93.5 cents prompted by talks of short selling. Recently listed Sin Heng fell 2 cents at 25.5 cents but recovered to end 1 cent down at 26.5 cents. Traders wondered if the IPO issue manager had started to buy back shares as part of the stabilisation program. Resource stocks were off the lows of the session with shares of Wilmar, Noble Group and Olam rising between 1 and 8 cents.
Expect market to consolidate taking cues from the overnight tumble in Wall Street and as investors await the highly anticipated congressional testimony by the US Fed Chairman on Wednesday and Thursday.
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February 24. STI lower at mid day
Asian stocks started lower dented by the po or US consumer confidence data that took Wall Street 1 per cent lower. Traders who took up stocks late yesterday probably threw them out again at the open bell on knee jerk selling. It wasn't all gloom and doom as a brighter Shanghai open and the subsequent recovery in Hong Kong's Hang Seng index inspired some bargain hunting and prompted some short covering. The STI index closed 19.12 points down at 2763.43 points but was off its 2749.4 points nadir. For every stock that rose about 1.3 fell. Turnover was 560mil shares with a value of $599mil traded.
Dealers said trading yesterday and today were unusually choppy and could be linked to the rollover of index futures contract tomorrow. `Just when you think the market was going down, it about turns' a dealer mused. Shares of Broadway rose 4 cents at 89.5 cents after the company announced a 3 cents dividend payout alongside its good results. Noble Group bounced from its $3.03 nadir to end unchanged at $3.12 after reporting results that were in line with expectations. CWT shares rose 3 cents at 915 cents on rumours that it may announce a special dividend with its results. Other shares that rose were Jardine C&C, Haw Par, IFS, SembMarine, UE, SATs Services and NOL that added between 2 and 58 cents.
On the balance, shares of Jardine Matheson, DBS, UOB, SGX, OCBC Bank, City Developments and SPH eased between 2 and $1.14.
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Market close Feb 24. Investor sentiment still cautious in the second session
Investor se ntiment remained cautious in the second session and though the STI index closed off the day‚s lows, there was noticeable selling towards the close, resulting in the benchmark STI closing 20.41 points down at 2762.14 points. For every stock that fell, about 1.2 rose. Turnover was 1.2bil shares with a value of $1.2bil traded.
Dealers said trading yesterday and today were unusually choppy and could be linked to the rollover of index futures contract tomorrow. `Just when you think the market was going down, it about turns' a dealer mused.
Shares of Broadway rose 6.5 cents at 92 cents after the company announced a dividend of 3 cents alongside its good results. Noble Group bounced from its $3.03 nadir to close down 1 cent at $3.11 after reporting results that were in line with expectations.
CWT shares rose 3 cents at 91.5 cents on rumours that it may announce a special dividend with its results. Other shares that rose were Jardine C&C, HL Asia, SembMarine, H aw Tar, UOI and Indo Agri, that added between 5 and 46 cents.
On the balance, shares of Jardine Matheson, DBS, UOB, SGX, and Great Eastern, eased between 8 and 68 cents.
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