Singapore Stock Market Poised for Friday Decline After Two-Day Gain

The Singapore stock market concluded its two-day winning streak, which saw it collect nearly 100 points or 0.9 percent, with a decline on Thursday. The Straits Times Index (STI) is now positioned just above the 5,580-point plateau, though it is anticipated to encounter renewed selling pressure on Friday amidst a negative global market outlook and escalating oil prices.

During Thursday's session, the STI fell by 13.66 points, or 0.24 percent, to close at 5,581.76, having traded within a range of 5,546.44 and 5,590.39. This downturn was primarily driven by losses in the financial and retail sectors, with some support from industrial companies preventing a steeper decline. The broader global forecast for Asian markets remains negative, influenced by tech sector weakness, surging crude oil prices, and heightened tensions in the Middle East. European and U.S. markets also ended Thursday sharply lower, suggesting a similar opening trend for Asian bourses.

The sharp sell-off on Wall Street was largely a negative reaction to earnings news from major technology firms such as Tesla (TSLA) and Alphabet (GOOGL), contributing to significant drops in the Dow, NASDAQ, and S&P 500 indices. Concurrently, crude oil prices surged again on Thursday due to concerns over a widening conflict in the Middle East, particularly following new attacks by Iran-backed Houthis on two Saudi Arabian tankers in the Red Sea. West Texas Intermediate (WTI) crude for September delivery climbed by $5.76, or 6.63 percent, to $92.59 per barrel.

Despite the recent dip, the Straits Times Index maintains its position just above the 5,580-point mark. Earlier in July, the index had reached record highs, hitting 5,561.42 on July 15 and delivering a total return of 21.2 percent by July 17. Over the past month, the index has advanced 7.01 percent, and it stands 30.63 percent higher compared to the same period last year. As Singapore's earnings season commences, constituents of the STI are collectively projected to deliver approximately 10 percent earnings growth in their current fiscal years.

The prevailing global market sentiment is heavily influenced by geopolitical tensions in the Middle East and concerns surrounding the outlook for inflation and potentially higher interest rates, exacerbated by rising crude oil prices. Positive U.S. economic data, such as an unexpected decrease in first-time claims for unemployment benefits last week, was largely overshadowed by the negative tech earnings and oil price dynamics. Domestically, Singapore's economy has shown resilience, with second-quarter Gross Domestic Product (GDP) growth surpassing forecasts and private sector activity picking up in June.

Analysts and market expectations point to a negative opening for Asian markets on Friday. Trading Economics models project the STI to trade at 5,428.80 points by the end of this quarter and 5,127.63 points in 12 months, indicating a cautious outlook. Investors will closely monitor corporate earnings reports throughout the ongoing season, scrutinizing revenue growth, profit margins, demand conditions, and management commentary for insights into future performance.