STI dips 0.3%

Property stocks are still weighing down local equities.

OCBC Investment Research said:

The continued mixed reactions on Wall Street overnight are unlikely to provide any positive cues to the local bourse this morning.

Despite opening above the 3200 psychological level yesterday, the STI fell through this support to close more than 0.3% lower; this could pave the way for further declines going forward.

As such, we could possibly see the index drifting lower in the direction of the 3150 resistance-turned-support today, with the next base lying at the 3110 key resistance-turned-support.

On the upside, 3200 is now the immediate support-turned-resistance, followed by the next obstacle at the 3230 recent peaks.

IG Markets Singapore meanwhile noted:

Property stocks are still weighing down Singapore equities as the dust settles on the government’s latest round of cooling measures.

Rather than witnessing a recovery from counters such as City Developments and CapitaLand following Monday’s big slides, yesterday saw another day of falls from the out-of-favour sector.

This highlights traders’ concerns that the hikes in additional buyer’s stamp duties could cause serious damage for property companies. It also shows how determined the government is to keep a lid in property prices and few would rule out another round of government intervention.

As a result the STI slipped 0.3% bringing it back down below the 3200 level, with the potential for us to head back towards the 3150 support level, as uncertainty over the US debt ceiling and local property measures reign in the bulls for now.