FTSE 100 in Europe falls 2.5%; NASDAQ up 0.4%

The STI opened with a 0.9% drop and declined further to a 1.5% lower close.

OCBC Investment Research said:

Despite the mixed reactions on Wall Street overnight, the mildly positive Nikkei start (+0.3% now) could cue the local bourse to a stronger opening this morning.

As a recap, local sentiments took a turn for the worse yesterday despite the strong rebound on Tuesday; the STI sunk 0.9% at the open and slipped further to a 1.5% lower close.

With today's tone likely to turn a tad more optimistic, we could see the index narrowing the 2799-2812 gap resistance formed yesterday.

Beyond that, the next obstacle can be found at the 2831 minor peak. On the downside, the immediate support is now pegged at 2763 (recent trough), with the subsequent base marked at the 2730 minor resistance-turned-support.

IG Markets Singapore meanwhile noted:

In Europe the FTSE 100 lost 2.5%, the CAC 40 plummeted 2.6% while the DAX fell 2.3%.

As a result of the euro’s demise last night, with some seeing it as entering the home straight of collapse, money has been pouring into US dollars.

On Wall Street markets fared much better underpinned by stronger-than-expected US new home sales. The Dow Jones Industrial Average was flat, The S&P 500 gained a modest 0.2% while NASDAQ rose 0.4%.

After a sudden snap in the positive start to the week it’s safe to say the dead cat has bounced, however it has not been buried yet. With such heavy sell-offs across risk assets another spike in bargain hunting is likely to present itself to traders.

In Asia, the ill winds of pessimism and financial crisis look set to blow in from the west today.

However, on the horizon we have potentially weather-changing news with China’s HSBC flash manufacturing PMI number out this morning. China has been a little quiet on the soft/hard landing front but will be very much in focus today.