Local market ‘faces uphill battle’, says analyst

The STI had already shown some negative signs last 20 July 2012, according to OCBC Investment Research.

OCBC Investment Research said:

The more than 1% retreat on Wall Street overnight and the similar Nikkei start (down 0.9% now) are likely to spook the local bourse into a poor opening this morning.

As a recap, the STI had already shown some negative signs last Friday; following a 0.1% lower opening, the index slipped further to a 0.4% loss by the close.

And with today's tone likely to remain more downside biased, we could see the index retreating further towards the 3000 psychological support. A break below this level could send the index back towards the 2930 subsequent base (minor trough).

On the upside, 3040 is the newly established immediate resistance (recent peak), while the next hurdle lies at the 3070 support-turned-resistance.

IG Markets Singapore meanwhile noted:

On the local front, the STI broke through and remained above 3000 points for the most of last week as strong corporate earnings bother here and in the US boosted optimism among traders that we have turned a corner.

What lies around that corner may not necessarily be an end to the eurozone crisis, the recovery of the US and Chinese economies and subsequent strong global growth however.

Having ended the week on 3015 points the local market faces an uphill battle this morning to add to these gains with the futures market pointing to a weak open. Japanese equities have opened more than 1% lower.