Likely to recover, remains volatile for the week

Singapore:
Singapore market opened down on Friday in response to the fall in Wall Street overnight due to weaker than expected US existing home sales number. Investors started to take profit after sharp gains on the first four days of the week and ahead of the released of the US new home sales number on Friday’s night. The benchmark STI fell 55 points or 1.8% to close the week at 2,922.91. Turnover fell, with only 0.8 billion shares worth S$1.1 billion transacted, compared to 1.1 billion shares worth S$1.5 billion done on Thursday. Losers led gainers 11 to 5. For the week, the Index gained 130.18 points or 4.6% on the first four days of the week before closed with a 75.18 points gain.

· Wall Street:
US market closed higher on Friday as encouraging economic indicators outweighed investors' fears about financials. On economic front, orders for durable manufactured goods rose unexpectedly in June, according to a U.S. Commerce Department report released Friday. Orders to factories for big-ticket items like cars, appliances and machinery rose 0.8% last month, far surpassing economists' forecast of a 0.4% decline. Also sending stocks up was an encouraging report on new home sales. Sales of new homes fell 0.6% in June to an annual sales rate of 530,000, from an upwardly revised rate of 533,000 in May, according to the U.S. Census Bureau. Despite home sales slipping, that level was well above economists' expectations. Wall Street also embraced news that consumer confidence got a larger boost in July than previously reported, according to a consumer sentiment survey conducted by Reuters and the University of Michigan . The revised index number came in at 61.2 in July, up from a preliminary reading of 56.6 for July and from 56.4 in June. DJIA rose 21.41 or 0.2% to 11,370.69 points while Nasdaq increased 30.42 or 1.3% to close at 2,310.53 points. Light crude oil shed US$2.23 to close at US$123.26 per barrel on NYMEX.

Outlook:
The Singapore market is likely to recover from last Friday profit taking session. The sell down on Friday was mainly due to concerns over the US property market, after the released of lower-than-expected existing home sales number on Thursday night. With the US new home sales number coming in better than expect and continuous fall in oil prices on Friday night, market sentiment is likely to improve. The local market is likely to continue to follow the US lead in this week. Major economic releases in the US are the Consumer Confidence on Tuesday, the advanced 2Q GDP number on Wednesday and the employment number on Friday. On the local front, the June loan growth number will be released on Thursday. We expect the loan growth rate to be 24%, down from 26.1% in May, the first decline in growth rate since August 2007.