Singapore share prices are expected to track the performance of US stocks next week amid signs the world's biggest economy was heading for a recession, dealers said.
"I think this kind of market is going to be very fluid and depend on news flow... We take the lead from the US," said Song Seng Wun, an economist with CIMB-GK Research.
"At this point, the stock market behaves as if recession is here already, in Singapore, in Asia," although the local economy itself is not, he added. A widely watched survey released on February 5 showed the services sector of the US economy contracted for the first time in nearly five years in January, raising the odds that a recession was at hand.
The Institute of Supply Management's index on non-manufacturing activity slumped to 41.9 percent in January from 54.4 percent in December. Services make up the lion's share of US economic activity. But on Thursday, the US congress overwhelmingly approved a giant economic stimulus plan sought by the White House in a bid to boost the economy.
For the two and a half days of trading ending February 6, the benchmark Straits Times closed at 2,932.09, down 75.71 points or 2.52 percent from the previous week.
Average daily volume was 1.55 billion shares valued at 2.0 billion Singapore dollars (1.41 billion US), compared with 1.45 billion shares worth 1.83 billion dollars the week before.